EconomyxAI · Beige Book Sector Monitor January 2007Released January 17, 2007 |
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Conditions index +0.22 avg of 11 sectors, −2 to +2 |
| Outlook index +0.14 sectors with an outlook |
| Districts growing 9/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | Released January 17, 2007, with information collected before early January 2007 (date not printed in the PDF). | | ■ | Most districts reported modest expansion; New York and San Francisco grew moderately, Dallas decelerated further from a high level, Minneapolis grew slightly, Boston was mixed and Cleveland softened. | | ■ | Retail sales rose modestly over the holidays with strong electronics but soft apparel, vehicle sales were sluggish in several districts, and tourism spending rose. | | ■ | Manufacturing expanded in most districts except for residential construction suppliers; housing kept softening while commercial real estate stayed strong and energy and mining remained at high levels. | | ■ | Labor markets tightened with moderate wage gains but rising benefit costs; prices for energy and several materials eased and competition held final prices in check. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Consumer Discretionary
XLY
▶ Steady | +0.32 |
| Health Care
XLV
▶ Steady | +0.32 |
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| Weakest prospects Real Estate
XLRE
▲ Improving | −0.11 |
| Materials
XLB
▶ Steady | −0.07 |
| Industrials
XLI
▼ Weakening | −0.02 |
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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 | | +0.47 | Leaning Favorable | +0.90 | +0.50 | ▶ +0.06 | | 2 | Consumer Discretionary
XLY | | +0.32 | Leaning Favorable | +0.58 | +0.50 | ▶ +0.10 | | 3 | Health Care
XLV | | +0.32 | Leaning Favorable | +0.35 | +0.50 | ▶ +0.03 | | 4 | Information Technology
XLK | | +0.08 | Neutral | +0.40 | +0.00 | ▶ −0.20 | | 5 | Financials
XLF | | +0.06 | Neutral | +0.01 | +0.50 | ▼ −0.42 | | 6 | Communication Services
XLC | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 7 | Consumer Staples
XLP | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 8 | Utilities
XLU | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Industrials
XLI | | −0.02 | Neutral | +0.21 | +0.00 | ▼ −0.45 | | 10 | Materials
XLB | | −0.07 | Neutral | −0.18 | +0.00 | ▶ −0.19 | | 11 | Real Estate
XLRE | | −0.11 | Neutral | +0.11 | −0.50 | ▲ +0.36 |
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 | | +0.50 |
Modest expansion in most districts; New York and San Francisco moderate; Dallas decelerating; Boston mixed; Cleveland softening. | Labor markets tightening with difficulty finding qualified workers; Dallas very tight; benefit costs rising. | | Inflation Pressure (higher = headwind) | | −0.25 |
Overall prices increased moderately; energy and many materials eased; competition kept final goods prices in check. | C&I lending up in six districts while mortgages and refinancing weakened; consumer delinquencies rising in New York and Atlanta. | Dallas contacts cite rising labor and health costs as top concern; Chicago housing shows signs of recovery. |
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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 | · | · | · | · | · | · | · | +1 | | FinancialsXLF | · | −1 | +1 | · | +1 | · | · | · | · | +1 | · | +1 | | Consumer DiscretionaryXLY | · | +1 | · | · | +1 | +1 | · | +1 | · | · | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | · | +1 | · | −1 | · | +1 | −1 | +1 | · | −1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | +1 | · | +1 | · | · | +1 | +1 | +1 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −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 −1 Richmond, St. Louis, Dallas Manufacturing contracted modestly; plant closings announced. Why it matters: Industrials drag. | Industrials +1 Boston, Chicago, San Francisco Aircraft and energy equipment demand robust. Why it matters: Industrials support. | Real Estate +1 New York Manhattan Class A rents up 35% on the year. Why it matters: Real Estate support. | Real Estate −1 Boston, Cleveland Home prices and sales still declining. Why it matters: Real Estate drag. | Financials −1 New York Loan demand down; consumer delinquencies up. Why it matters: Largest Financials weight. | Information Technology −1 Dallas High-tech sales weaker than expected. Why it matters: IT drag. |
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Twelve Fed districts District roundup Boston Flat Outlook ▶ Mixed results late 2006. |
| New York Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| Philadelphia Growing +0.5 Outlook ▲ Advanced modestly. |
| Cleveland Contracting −0.5 Outlook ▼ Softened since mid November. |
| Richmond Growing +0.5 Outlook ▲ Expanded modestly. |
| Atlanta Growing +0.5 Outlook ▲ Expanded modestly. |
| Chicago Growing +0.5 Outlook ▲ Expanded at a more modest pace. |
| St. Louis Growing +0.5 Outlook ▲ Expanded modestly. |
| Minneapolis Growing +0.5 Outlook ▲ Increased slightly. |
| Kansas City Growing +0.5 Outlook ▲ Slowed to a modest pace. |
| Dallas Flat Outlook ▶ Continued to decelerate. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
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Where the signal is thin or split Divergences to watch | Real Estate — Commercial strength in New York and Richmond offsets residential drags, lifting Real Estate close to neutral.
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| | Industrials — Three -1 readings split Industrials, pulling it below last report's broad +1.
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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 |