EconomyxAI · Beige Book Sector Monitor January 2009Released January 14, 2009 |
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Conditions index −0.98 avg of 11 sectors, −2 to +2 |
| Outlook index −1.10 sectors with an outlook |
| Districts growing 0/12 per National Summary |
| Positive momentum 2/11 sectors improving |
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This release in brief The read | ■ | Released January 14, 2009, with information collected before January 5, 2009. | | ■ | Overall economic activity continued to weaken across almost all districts, with reduced or low activity across a wide range of industries. | | ■ | Holiday retail sales were weak despite deep discounting in most districts, and vehicle sales were weak or down in all ten districts reporting on them. | | ■ | Manufacturing fell across many industries, though defense, medical devices, aerospace and food processing held up; commercial real estate deteriorated, with Dallas transactions grinding to a halt. | | ■ | Lending declined and credit stayed tight, but refinancing picked up; energy activity fell sharply as prices dropped, and input prices declined in most districts. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Staples
XLP
▶ Steady | −0.22 |
| Health Care
XLV
▶ Steady | −0.34 |
| Utilities
XLU
▶ Steady | −0.42 |
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| Weakest prospects Consumer Discretionary
XLY
▶ Steady | −1.38 |
| Industrials
XLI
▶ Steady | −1.19 |
| Energy
XLE
▼ Weakening | −1.18 |
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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 | Consumer Staples
XLP | | −0.22 | Leaning Unfavorable | +0.36 | −1.00 | ▶ −0.03 | | 2 | Health Care
XLV | | −0.34 | Leaning Unfavorable | +0.18 | −1.00 | ▶ +0.14 | | 3 | Utilities
XLU | | −0.42 | Leaning Unfavorable | +0.00 | −1.00 | ▶ +0.00 | | 4 | Communication Services
XLC | | −0.52 | Unfavorable | −0.15 | −1.00 | ▶ −0.03 | | 5 | Financials
XLF | | −0.90 | Unfavorable | −1.46 | −1.00 | ▲ +0.34 | | 6 | Information Technology
XLK | | −0.92 | Unfavorable | −1.40 | −1.00 | ▲ −0.18 | | 7 | Materials
XLB | | −0.95 | Unfavorable | −1.23 | −1.00 | ▶ −0.56 | | 8 | Real Estate
XLRE | | −1.10 | Unfavorable | −1.95 | −1.00 | ▼ −0.27 | | 9 | Energy
XLE | | −1.18 | Unfavorable | −1.50 | −1.06 | ▼ −1.23 | | 10 | Industrials
XLI | | −1.19 | Unfavorable | −1.74 | −1.50 | ▶ −0.28 | | 11 | Consumer Discretionary
XLY | | −1.38 | Unfavorable | −1.91 | −1.50 | ▶ −0.13 |
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 | | −2.00 |
Activity continued to weaken across almost all districts. | Layoffs continued, hiring freezes and reduced hours; manufacturing and financial job cuts. | | Inflation Pressure (higher = headwind) | | +0.75 |
Input prices declining in most districts; heavy holiday discounting; wage pressures contained with pay freezes. | Lending declined; credit tight or tightening; credit quality a concern; refinancing up on lower rates. | Most respondents don't expect improvement until second half of 2009, a growing number see early 2010. |
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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 | −1 | −1 | −1 | −1 | −1 | −1 | −2 | | Health CareXLV | · | · | · | +1 | · | · | +1 | · | +1 | · | · | · | | FinancialsXLF | −1 | −2 | · | −1 | −1 | −1 | −1 | · | −1 | −2 | −2 | −2 | | Consumer DiscretionaryXLY | −1 | −2 | −2 | −1 | −2 | −2 | −2 | −2 | −2 | −2 | −2 | −2 | | Communication ServicesXLC | · | −1 | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | −2 | −2 | −2 | −2 | −2 | −2 | −2 | −1 | −2 | −2 | −1 | | Consumer StaplesXLP | · | · | +1 | · | · | · | · | · | · | · | +1 | +1 | | EnergyXLE | −1 | −1 | −1 | · | −1 | −1 | −1 | · | −1 | −2 | −2 | −1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −2 | −2 | −2 | −2 | −2 | −2 | −2 | −1 | −1 | −2 | −2 | −2 | | MaterialsXLB | −1 | −1 | −1 | −2 | −1 | −1 | −2 | −1 | −2 | −1 | −1 | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Consumer Discretionary −2 San Francisco Holiday season retail sales very sluggish. Why it matters: Largest Discretionary weight. | Industrials −2 San Francisco Manufacturing dropped significantly on net. Why it matters: Large Industrials weight. | Real Estate −2 New York, San Francisco Manhattan office vacancy at two-year high; SF office market exceptionally weak. Why it matters: Real Estate at the bottom. | Financials −2 New York Declining loan demand across all categories; higher delinquencies. Why it matters: Financials weight. | Energy −2 Dallas, Kansas City Drilling and rig counts declining; energy activity decreased markedly. Why it matters: Energy negative. | Consumer Discretionary −2 Most districts Vehicle sales weak or down in all reporting districts. Why it matters: Broad Discretionary weakness. |
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Twelve Fed districts District roundup Boston Contracting −1.5 Outlook ▼ Continued to slow; business services more upbeat. |
| New York Contracting −1.5 Outlook ▼ Weakened somewhat more; financial sector weakened further. |
| Philadelphia Contracting −1.0 Outlook ▼ Remained soft; outlook pessimistic. |
| Cleveland Contracting −1.5 Outlook ▼ Weakened further; freight declined across all sectors. |
| Richmond Contracting −1.5 Outlook ▼ Slowed further; disappointing holiday sales. |
| Atlanta Contracting −1.5 Outlook ▼ Weak; auto sales dismal. |
| Chicago Contracting −2.0 Outlook ▼ Declined further; lower confidence. |
| St. Louis Contracting −1.5 Outlook ▼ Continued to decline. |
| Minneapolis Contracting −1.0 Outlook ▼ Decreased slightly in most sectors. |
| Kansas City Contracting −2.0 Outlook ▼ Deteriorated; manufacturing dropped sharply. |
| Dallas Contracting −1.5 Outlook ▼ Continued to weaken; improvement not seen until late 2009. |
| San Francisco Contracting −2.0 Outlook ▼ Weakened; manufacturing dropped significantly. |
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Where the signal is thin or split Divergences to watch | Consumer Staples — food processing and discount stores held up, keeping Staples near neutral.
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| | Energy — fell from top sector in mid-2008 to near the bottom on collapsing prices.
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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 |