EconomyxAI · Beige Book Sector Monitor January 2008Released January 16, 2008 |
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Conditions index +0.02 avg of 11 sectors, −2 to +2 |
| Outlook index −0.09 sectors with an outlook |
| Districts growing 5/12 per National Summary |
| Positive momentum 2/11 sectors improving |
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This release in brief The read | ■ | Released January 16, 2008, with information collected before early January 2008 (date not printed in the PDF). | | ■ | Activity increased modestly from mid-November through December but more slowly than before; seven districts reported a slight increase, two mixed conditions and three slowing. | | ■ | Holiday sales were generally disappointing and vehicle sales fell below year-ago levels, though tourism was mostly positive and foreign buyers helped in Atlanta and New York. | | ■ | Housing stayed quite weak in all districts, commercial real estate softened in several, and manufacturing varied with housing and autos weak but exports, aircraft, defense and energy equipment strong. | | ■ | Business and consumer lending slowed with tighter standards and rising delinquencies; costs rose for food, petrochemicals, metals and energy, while wage increases stayed moderate. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Health Care
XLV
▶ Steady | +0.35 |
| Consumer Staples
XLP
▶ Steady | +0.06 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | −0.63 |
| Financials
XLF
▶ Steady | −0.61 |
| Consumer Discretionary
XLY
▶ Steady | −0.44 |
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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 | | +0.75 | Favorable | +1.12 | +1.00 | ▶ +0.26 | | 2 | Health Care
XLV | | +0.35 | Leaning Favorable | +0.49 | +0.50 | ▶ +0.10 | | 3 | Consumer Staples
XLP | | +0.06 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 4 | Information Technology
XLK | | +0.05 | Neutral | +0.37 | +0.00 | ▶ −0.14 | | 5 | Communication Services
XLC | | −0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 6 | Utilities
XLU | | −0.02 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 7 | Industrials
XLI | | −0.12 | Neutral | +0.07 | +0.00 | ▶ −0.12 | | 8 | Materials
XLB | | −0.13 | Neutral | −0.20 | +0.00 | ▶ −0.03 | | 9 | Consumer Discretionary
XLY | | −0.44 | Leaning Unfavorable | −0.46 | −0.50 | ▶ −0.22 | | 10 | Financials
XLF | | −0.61 | Unfavorable | −0.49 | −1.00 | ▶ −0.07 | | 11 | Real Estate
XLRE | | −0.63 | Unfavorable | −0.66 | −1.00 | ▶ −0.12 |
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 | | +0.25 |
Modest increase at a slower pace; seven districts slight increase, two mixed, three slowing. | Labor markets relatively tight for skilled workers while housing-related industries trimmed payrolls; Kansas City wage pressures eased. | | Inflation Pressure (higher = headwind) | | −1.00 |
Rising costs for food, petrochemicals, metals and energy inputs; higher transport costs; some firms raising output prices. | Business and consumer lending slowed; mortgage lending contracted in all districts; tighter standards; deposit pressure in six districts; delinquencies up. | Retailers cautious on 2008; housing expected to stay weak in early 2008; slower commercial development expected. |
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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 | | Health CareXLV | +1 | · | · | +1 | · | +1 | · | · | +1 | · | · | +1 | | FinancialsXLF | · | −1 | · | −1 | −1 | −1 | · | · | · | −1 | · | · | | Consumer DiscretionaryXLY | · | · | · | −1 | −1 | · | · | · | +1 | · | −1 | −1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | · | +1 | · | −1 | · | +1 | · | · | +1 | −1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | +1 | +1 | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | · | −1 | · | −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 Real Estate −1 Boston, Philadelphia, Richmond, Atlanta, Chicago, Kansas City, San Francisco Home sales well below year ago; inventories high. Why it matters: Broad Real Estate drag. | Financials −1 New York Consumer delinquencies most widespread in 13 years. Why it matters: Largest Financials weight. | Energy +2 Dallas Texas rig count jumped sharply. Why it matters: Largest Energy weight. | Consumer Discretionary −1 San Francisco, Dallas Holiday sales flat to down; early discounting. Why it matters: Discretionary drag. | Information Technology −1 Dallas High-tech factories reported slowing. Why it matters: IT drag. | Information Technology +1 San Francisco IT products on moderate growth path. Why it matters: Largest IT weight. |
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Twelve Fed districts District roundup Boston Flat Outlook ▶ Mixed results; considerable uncertainty. |
| New York Flat Outlook ▶ Economic growth slowed. |
| Philadelphia Growing +0.5 Outlook ▲ Increased slightly. |
| Cleveland Flat Outlook ▶ Expanded at a slow pace. |
| Richmond Contracting −0.5 Outlook ▼ Slowed further. |
| Atlanta Flat Outlook ▶ Mixed picture. |
| Chicago Growing +0.5 Outlook ▲ Expanded at a slow pace. |
| St. Louis Growing +0.5 Outlook ▲ Expanded modestly. |
| Minneapolis Growing +0.5 Outlook ▲ Grew modestly. |
| Kansas City Growing +0.5 Outlook ▲ Expanded modestly, some softening. |
| Dallas Flat Outlook ▶ Continued to decelerate. |
| San Francisco Flat Outlook ▶ Grew modestly. |
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Where the signal is thin or split Divergences to watch | Real Estate — Seven -1s keep weighted Real Estate at its weakest level.
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| | Financials — Five -1s led by New York keep Financials firmly negative.
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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 |