EconomyxAI · Beige Book Sector Monitor January 2004Released January 14, 2004 |
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Conditions index +0.45 avg of 11 sectors, −2 to +2 |
| Outlook index +0.22 sectors with an outlook |
| Districts growing 10/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released January 14, 2004, with information collected before January 6, 2004. | | ■ | The economy continued to improve; San Francisco expanded soundly and most districts gave quite favorable reports, while Cleveland, Chicago and Dallas grew only slowly and St. Louis was mixed. | | ■ | Holiday sales were generally positive and strongest in San Francisco; auto sales improved or held steady and travel and tourism rose considerably on good ski conditions. | | ■ | Manufacturing increased in nearly all districts, with factory employment edging up in New York, Philadelphia and Kansas City and high-tech production rebounding on customer capex. | | ■ | Labor markets improved modestly; wage pressure stayed subdued while steel and natural gas costs rose sharply; mad cow disease created uncertainty for cattle ranchers. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.68 |
| Consumer Discretionary
XLY
▲ Improving | +0.64 |
| Information Technology
XLK
▶ Steady | +0.44 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | −0.01 |
| Utilities
XLU
▶ Steady | −0.00 |
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All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
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| 1 | Industrials
XLI | | +0.68 | Favorable | +1.12 | +0.94 | ▶ +0.39 | | 2 | Consumer Discretionary
XLY | | +0.64 | Favorable | +1.03 | +0.55 | ▲ +0.52 | | 3 | Information Technology
XLK | | +0.44 | Leaning Favorable | +0.67 | +0.55 | ▶ +0.07 | | 4 | Financials
XLF | | +0.27 | Leaning Favorable | +0.38 | +0.50 | ▶ −0.12 | | 5 | Real Estate
XLRE | | +0.26 | Leaning Favorable | +0.65 | +0.09 | ▶ +0.23 | | 6 | Communication Services
XLC | | +0.18 | Leaning Favorable | +0.40 | +0.00 | ▲ +0.20 | | 7 | Materials
XLB | | +0.18 | Leaning Favorable | +0.27 | +0.00 | ▶ −0.14 | | 8 | Health Care
XLV | | +0.15 | Leaning Favorable | +0.29 | +0.00 | ▶ +0.12 | | 9 | Energy
XLE | | +0.04 | Neutral | +0.10 | −0.17 | ▶ +0.00 | | 10 | Utilities
XLU | | −0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Consumer Staples
XLP | | −0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 |
Prospect Score blends current conditions, district outlooks, momentum, a sector-specific macro tilt and margins. Now = weighted current conditions; Outlook = n/a when too few districts gave one; Mom. = change vs the average of the two prior releases. |
National Summary, scored −2 to +2 Macro backdrop | Overall Economic Activity | | +1.00 |
Economy continued to improve; most districts quite favorable, SF expanding soundly, only three slow and one mixed. | Modest improvements via fewer layoffs and some hiring, but hiring still minimal in several districts and workers easy to recruit. | | Inflation Pressure (higher = headwind) | | +0.25 |
Final goods and retail prices steady, less holiday discounting; steel, copper, aluminum and natural gas up sharply. | Loan demand flat or slightly lower as refinancing fell; business loans up in three districts; credit quality little changed. | All districts expect continued retail improvement; manufacturers expect further gains and higher 2004 capex. |
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Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
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| Information TechnologyXLK | +1 | · | +1 | · | · | · | · | · | · | · | +1 | +1 | | Health CareXLV | +1 | · | · | · | · | · | · | · | · | · | · | +1 | | FinancialsXLF | · | +1 | +1 | · | · | +1 | · | −1 | · | · | · | · | | Consumer DiscretionaryXLY | +1 | +1 | +1 | · | · | +1 | +1 | +1 | +1 | +1 | · | +2 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | +1 | +1 | +1 | +1 | +1 | +1 | · | +1 | +1 | +1 | +2 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | · | +1 | · | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | · | · | +1 | +1 | · | · | · | · | · | +1 | | MaterialsXLB | · | · | · | +1 | · | · | · | · | +1 | · | +1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 San Francisco Manufacturing growth accelerated; order books nearly full. Why it matters: Large Industrials weight. | Industrials +1 broad−based Broad-based Manufacturing gains in ten more districts. Why it matters: Broad Industrials strength. | Consumer Discretionary +2 San Francisco Robust holiday spending, less discounting. Why it matters: Large Discretionary weight. | Consumer Discretionary +1 broad−based Broad-based Holiday sales solid in nine districts. Why it matters: Discretionary positive. | Information Technology +1 San Francisco, Boston, Dallas, Philadelphia Semiconductor and tech orders growing. Why it matters: IT positive. | Financials +1 New York Profits strong; bonuses up 18-20 percent. Why it matters: Largest Financials weight. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Appears to be improving. |
| New York Growing +0.5 Outlook ▲ Further signs of strengthening. |
| Philadelphia Growing +0.5 Outlook ▲ Improved. |
| Cleveland Flat Outlook ▲ Relatively unchanged. |
| Richmond Growing +0.5 Outlook ▲ Expanded at a moderate rate. |
| Atlanta Growing +0.5 Outlook ▲ Remained favorable. |
| Chicago Growing +0.5 Outlook ▲ Continued to improve modestly. |
| St. Louis Flat Outlook ▲ Mixed. |
| Minneapolis Growing +1.0 Outlook ▲ Grew at a healthy pace. |
| Kansas City Growing +1.0 Outlook ▲ Strengthened further. |
| Dallas Growing +0.5 Outlook ▲ Expanded modestly. |
| San Francisco Growing +1.0 Outlook ▲ Expanded soundly. |
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Where the signal is thin or split Divergences to watch | Industrials — nearly every district positive with a San Francisco +2 gives the strongest Industrials reading of the cycle.
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| | Consumer Discretionary — San Francisco's +2 and New York's +1 carry large weights, lifting the weighted score above the simple average.
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How to read this. Each Fed district’s report is scored −2 (strong contraction) to +2 (strong expansion) for each GICS sector, then weighted by the district’s share of that sector’s activity. The Prospect Score blends current conditions (25%), district outlooks (35%), momentum (20%), a sector-specific macro tilt (10%) and margin pressure (10%). The Beige Book describes regional activity, not earnings or valuations. Weights and sensitivities are illustrative. This newsletter is for information only and is not investment advice. Source: Federal Reserve Beige Book · Scored by EconomyxAI |