EconomyxAI · Sector Watch January 2010Released January 13, 2010 |
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Conditions index +0.15 avg of 11 sectors, −2 to +2 |
| Outlook index +0.34 sectors with an outlook |
| Districts growing 10/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released January 13, 2010, with information collected before January 4, 2010. | | ■ | Economic activity remained low but improved modestly further and more broadly: ten districts reported some increase, while Philadelphia and Richmond reported mixed conditions. | | ■ | Holiday spending was slightly above 2008 in most districts though far below 2007, retail inventories stayed very lean, and auto sales held steady or rose slightly. | | ■ | Manufacturing improved in six districts, helped by Asian exports, auto suppliers and semiconductors, and outlooks were optimistic; home sales rose but commercial real estate stayed weak with rising vacancies. | | ■ | Loan demand kept declining and credit quality deteriorated further; labor markets stayed soft with scattered hiring, and metals prices rose while other prices stayed subdued. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Consumer Discretionary
XLY
▶ Steady | +0.50 |
| Materials
XLB
▲ Turning up | +0.46 |
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| Weakest prospects Financials
XLF
▶ Steady | −0.47 |
| Real Estate
XLRE
▶ Steady | −0.44 |
| Utilities
XLU
▶ Steady | +0.18 |
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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 | Energy
XLE | | +0.52 | Favorable | +0.82 | +0.50 | ▶ +0.39 | | 2 | Consumer Discretionary
XLY | | +0.50 | Leaning Favorable | +0.59 | +0.50 | ▶ +0.65 | | 3 | Materials
XLB | | +0.46 | Leaning Favorable | +0.46 | +0.50 | ▲ +0.29 | | 4 | Information Technology
XLK | | +0.38 | Leaning Favorable | +0.66 | +0.50 | ▶ +0.01 | | 5 | Health Care
XLV | | +0.33 | Leaning Favorable | +0.29 | +0.50 | ▶ +0.24 | | 6 | Industrials
XLI | | +0.24 | Leaning Favorable | +0.28 | +0.69 | ▶ −0.14 | | 7 | Consumer Staples
XLP | | +0.21 | Leaning Favorable | +0.14 | +0.50 | ▶ +0.07 | | 8 | Communication Services
XLC | | +0.19 | Leaning Favorable | +0.00 | +0.50 | ▶ −0.03 | | 9 | Utilities
XLU | | +0.18 | Leaning Favorable | +0.00 | +0.50 | ▶ +0.00 | | 10 | Real Estate
XLRE | | −0.44 | Leaning Unfavorable | −0.75 | −0.50 | ▶ −0.09 | | 11 | Financials
XLF | | −0.47 | Leaning Unfavorable | −0.86 | −0.50 | ▶ −0.14 |
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 |
Ten districts improved; Philadelphia and Richmond mixed. | Labor markets soft; modest hiring pickup in New York; job loss pace slowed. | | Inflation Pressure (higher = headwind) | | +0.25 |
Price pressures subdued; metals prices rising; retail prices steady. | Loan demand declining or weak; credit quality deteriorating; small VC and IPO improvement. | Manufacturing outlook optimistic; capital spending cautious; slow modest improvement 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 | +1 | +1 | | Health CareXLV | +1 | · | · | · | · | · | · | · | · | · | · | +1 | | FinancialsXLF | −1 | −1 | −1 | −1 | · | −1 | · | −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 | | Consumer StaplesXLP | · | · | +1 | · | · | · | · | · | · | · | +1 | · | | EnergyXLE | · | · | · | −1 | · | +1 | · | −1 | +1 | +1 | +1 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | −1 | −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 Information Technology +1 San Francisco Semiconductors strengthening. Why it matters: Largest IT weight positive. | Consumer Discretionary +1 Most districts Holiday sales above 2008 with lean inventories. Why it matters: Discretionary positive. | Industrials +1 New York, Chicago, Cleveland, Boston, San Francisco Manufacturing improved on exports and autos. Why it matters: Industrials positive. | Real Estate −1 Most districts Commercial vacancies rising, rents falling. Why it matters: Real Estate lags. | Financials −1 Most districts Loan demand declining; credit quality deteriorating. Why it matters: Financials lags. | Energy +1 Atlanta, Minneapolis, Kansas City, Dallas, San Francisco Oil and gas drilling and production rising. Why it matters: Energy positive. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Picked up in recent months. |
| New York Growing +0.5 Outlook ▲ Further signs of improvement; modest hiring pickup. |
| Philadelphia Flat Outlook ▲ Mixed. |
| Cleveland Growing +0.5 Outlook ▲ Some signs of improvement at a low level. |
| Richmond Flat Outlook ▲ Varied; some sectors contracting. |
| Atlanta Growing +0.5 Outlook ▲ Improved; holiday sales better than expected. |
| Chicago Growing +1.0 Outlook ▲ Increased in December. |
| St. Louis Growing +0.5 Outlook ▲ Further signs of improvement. |
| Minneapolis Growing +0.5 Outlook ▲ Grew tepidly. |
| Kansas City Growing +0.5 Outlook ▲ Expanded more modestly. |
| Dallas Growing +1.0 Outlook ▲ Continued to firm. |
| San Francisco Growing +0.5 Outlook ▲ Picked up slightly. |
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Where the signal is thin or split Divergences to watch | Breadth — the most widespread improvement since the recession began.
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| | Financials — credit quality still deteriorating even as activity recovers.
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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 |