EconomyxAI · Sector Watch January 2005Released January 19, 2005 |
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Conditions index +0.48 avg of 11 sectors, −2 to +2 |
| Outlook index +0.28 sectors with an outlook |
| Districts growing 11/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released January 19, 2005, with information collected before January 10, 2005. | | ■ | Activity continued to expand from late November through early January; eleven districts expanded, Atlanta, New York and Richmond said the pace quickened, and Cleveland was mixed. | | ■ | Holiday sales were above year-ago in a number of districts after a slow start, and tourism strengthened, with Broadway setting a box-office record and Florida theme parks at capacity. | | ■ | Manufacturing output rose in nine districts and most expect to raise capital spending in 2005; commercial real estate strengthened, with New York Class A vacancy at a 2.5-year low. | | ■ | Labor markets firmed in many districts while inflation remained largely in check; some input and building material prices rose sharply. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.71 |
| Information Technology
XLK
▲ Turning up | +0.55 |
| Financials
XLF
▲ Improving | +0.54 |
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| Weakest prospects Communication Services
XLC
▶ Steady | −0.01 |
| 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 | | +0.71 | Favorable | +0.93 | +1.00 | ▶ +0.17 | | 2 | Information Technology
XLK | | +0.55 | Favorable | +0.60 | +0.50 | ▲ +0.70 | | 3 | Financials
XLF | | +0.54 | Favorable | +0.90 | +0.64 | ▲ +0.51 | | 4 | Consumer Discretionary
XLY | | +0.45 | Leaning Favorable | +0.74 | +0.42 | ▲ +0.34 | | 5 | Energy
XLE | | +0.43 | Leaning Favorable | +0.61 | +0.50 | ▶ −0.15 | | 6 | Materials
XLB | | +0.27 | Leaning Favorable | +0.62 | +0.00 | ▶ −0.13 | | 7 | Real Estate
XLRE | | +0.22 | Leaning Favorable | +0.64 | −0.02 | ▶ +0.09 | | 8 | Health Care
XLV | | +0.11 | Neutral | +0.29 | +0.00 | ▶ +0.10 | | 9 | Utilities
XLU | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 10 | Consumer Staples
XLP | | −0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Communication Services
XLC | | −0.01 | Neutral | +0.00 | +0.00 | ▶ −0.20 |
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 |
Eleven districts expanding, three with a quicker pace; Cleveland mixed. | Firmer labor markets in late 2004; manufacturing employment rose in four districts; strong securities hiring. | | Inflation Pressure (higher = headwind) | | +0.25 |
Inflation largely in check; small input cost increases with some sharp rises; final prices up modestly. | Modestly higher C&I lending tempered by slower mortgage lending; credit steady but thin loan margins. | Manufacturers expect positive conditions; most districts report plans to raise 2005 capital spending; Chicago already placing orders. |
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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 | | Health CareXLV | +1 | · | · | · | · | · | · | · | · | · | · | +1 | | FinancialsXLF | · | +2 | +1 | · | · | · | · | +1 | · | +1 | +1 | +1 | | Consumer DiscretionaryXLY | +1 | +1 | +1 | · | +1 | +1 | · | +1 | +1 | +1 | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | +1 | +1 | · | +1 | +1 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | · | −1 | +1 | +1 | · | +1 | · | · | · | +1 | | MaterialsXLB | · | · | · | · | · | +1 | +1 | · | +1 | · | +1 | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Financials +2 New York Securities activity surged in fourth quarter; hiring picked up. Why it matters: Largest Financials weight. | Industrials +1 broad−based Broad-based Manufacturing and freight positive in eleven districts. Why it matters: Broad Industrials strength. | Consumer Discretionary +1 broad−based Broad-based Holiday sales up modestly; tourism strong. Why it matters: Discretionary positive. | Information Technology +1 San Francisco, Philadelphia, Dallas Semiconductor orders solid; IT services demand strengthened. Why it matters: IT positive. | Real Estate +1 New York, San Francisco, St. Louis Housing robust; office vacancies falling. Why it matters: Real Estate positive. | Health Care +1 Boston, San Francisco Biopharma revenues growing at double digits. Why it matters: Health Care positive. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Fairly upbeat. |
| New York Growing +1.5 Outlook ▲ Clearly gained further momentum. |
| Philadelphia Growing +1.0 Outlook ▲ Expanded. |
| Cleveland Flat Outlook ▲ Mixed across sectors. |
| Richmond Growing +1.0 Outlook ▲ Expanded at a quicker pace. |
| Atlanta Growing +1.0 Outlook ▲ Pace increased. |
| Chicago Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| St. Louis Growing +1.0 Outlook ▲ Continued to expand. |
| Minneapolis Growing +1.0 Outlook ▲ Continuing signs of growth. |
| Kansas City Growing +1.5 Outlook ▲ Expanded solidly. |
| Dallas Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a solid pace. |
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Where the signal is thin or split Divergences to watch | Financials — New York's +2 carries the largest Financials weight, lifting the weighted score well above the simple average.
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| | Industrials — eleven of twelve districts at +1 make Industrials the broadest positive sector this release.
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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 |