EconomyxAI · Sector Watch January 2006Released January 18, 2006 |
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Conditions index +0.46 avg of 11 sectors, −2 to +2 |
| Outlook index +0.18 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released January 18, 2006, with information collected before early January 2006 (date not printed in the PDF). | | ■ | Expansion continued across all twelve districts through late 2005; San Francisco, Richmond, Atlanta and Dallas reported accelerating or solid growth and six districts moderate or modest growth. | | ■ | Holiday retail sales rose everywhere except Cleveland, travel and tourism were robust, and auto sales stayed sluggish with domestic brands weak. | | ■ | Manufacturing increases were widely reported, robust in seven districts; housing cooled in many districts while commercial real estate kept improving and energy stayed strong. | | ■ | Employment rose moderately with tightness in specific occupations; energy price increases moderated and retail prices were broadly stable. |
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Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▲ Turning up | +0.81 |
| Industrials
XLI
▶ Steady | +0.47 |
| Information Technology
XLK
▶ Steady | +0.44 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | +0.00 |
| Utilities
XLU
▶ Steady | +0.01 |
| Communication Services
XLC
▶ Steady | +0.04 |
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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 | Energy
XLE | | +0.81 | Favorable | +1.26 | +1.00 | ▲ +0.16 | | 2 | Industrials
XLI | | +0.47 | Leaning Favorable | +1.05 | +0.50 | ▶ +0.14 | | 3 | Information Technology
XLK | | +0.44 | Leaning Favorable | +0.70 | +0.50 | ▶ +0.03 | | 4 | Consumer Discretionary
XLY | | +0.21 | Leaning Favorable | +0.53 | +0.00 | ▶ +0.32 | | 5 | Materials
XLB | | +0.19 | Leaning Favorable | +0.37 | +0.00 | ▶ +0.05 | | 6 | Financials
XLF | | +0.15 | Leaning Favorable | +0.38 | +0.00 | ▶ −0.19 | | 7 | Health Care
XLV | | +0.12 | Neutral | +0.36 | +0.00 | ▶ +0.06 | | 8 | Real Estate
XLRE | | +0.11 | Neutral | +0.40 | +0.00 | ▶ −0.20 | | 9 | Communication Services
XLC | | +0.04 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 10 | Utilities
XLU | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Consumer Staples
XLP | | +0.00 | 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 |
Expansion in all twelve districts; four accelerating or solid, six moderate or modest. | Moderate employment gains; stronger in New York, Atlanta, Kansas City and Dallas; occupation shortages widespread; wages moderate. | | Inflation Pressure (higher = headwind) | | −0.50 |
Energy price increases moderated or reversed in seven districts; input costs still a concern; retail prices stable. | Commercial lending up moderately in five districts, consumer lending flat or down in most; securities industry robust. | Gift-card sales point to stronger early 2006; contacts expect commercial construction to continue rising. |
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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 | · | · | · | · | · | · | +1 | | FinancialsXLF | · | +1 | +1 | +1 | · | · | · | · | · | · | · | · | | Consumer DiscretionaryXLY | +1 | +1 | · | −1 | +1 | +1 | · | · | · | · | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | +1 | +1 | · | +1 | +1 | · | +1 | +1 | +1 | +2 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | +2 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | · | · | · | · | · | · | +1 | · | +1 | +1 | +1 | | MaterialsXLB | · | · | · | +1 | · | · | +1 | · | +1 | · | +1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy +2 Dallas Oil service demand extremely strong; long backlogs. Why it matters: Largest Energy weight. | Industrials +2 San Francisco Machine tool makers near full capacity; aircraft production rapid. Why it matters: Large Industrials weight. | Industrials +1 broad−based Broad-based Manufacturing expanded in most districts. Why it matters: Broad Industrials strength. | Financials +1 New York Securities bonuses up 15-20%. Why it matters: Largest Financials weight. | Consumer Discretionary +1 San Francisco, New York, Boston Holiday sales solid; tourism vigorous. Why it matters: Discretionary support. | Consumer Discretionary −1 Cleveland Holiday sales disappointing; auto sales down. Why it matters: Discretionary drag. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Continues to expand; manufacturers ended 2005 with momentum. |
| New York Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| Philadelphia Growing +0.5 Outlook ▲ Expanded moderately. |
| Cleveland Growing +0.5 Outlook ▲ Reasonably strong; households weaker. |
| Richmond Growing +1.0 Outlook ▲ Expanded at a solid pace. |
| Atlanta Growing +1.0 Outlook ▲ Expanded at a solid pace. |
| Chicago Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| St. Louis Growing +0.5 Outlook ▲ Expanded modestly. |
| Minneapolis Growing +0.5 Outlook ▲ Grew moderately. |
| Kansas City Growing +0.5 Outlook ▲ Expanded moderately. |
| Dallas Growing +1.0 Outlook ▲ Activity accelerated. |
| 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 | Industrials — San Francisco's +2 lifts the weighted Industrials score above the simple average.
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| | Energy — Dallas's +2 dominates the weighted Energy score.
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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 |