EconomyxAI · Sector Watch January 2011Released January 12, 2011 |
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Conditions index +0.38 avg of 11 sectors, −2 to +2 |
| Outlook index +0.55 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 12, 2011, with information collected on or before January 3, 2011. | | ■ | Activity continued to expand moderately in November and December; conditions improved in Boston, New York, Philadelphia and Richmond and rose modestly to moderately elsewhere. | | ■ | Holiday retail sales beat 2009 in every district, manufacturing kept recovering with especially solid orders in Richmond and Chicago, and nonfinancial services demand rose. | | ■ | Housing stayed weak everywhere and commercial construction subdued, though commercial leasing picked up in several districts; lending was mixed. | | ■ | Input costs rose with only modest pass-through, hiring firmed slightly with little wage pressure, and most contacts were cautiously optimistic about 2011. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.68 |
| | Consumer Discretionary
XLY
▶ Steady | +0.60 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | −0.23 |
| Health Care
XLV
▶ Steady | +0.19 |
| Utilities
XLU
▶ Steady | +0.20 |
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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 | Industrials
XLI | | +0.68 | Favorable | +1.21 | +0.98 | ▶ +0.23 | | 2 | Energy
XLE | | +0.64 | Favorable | +1.14 | +0.78 | ▶ −0.21 | | 3 | Consumer Discretionary
XLY | | +0.60 | Favorable | +1.06 | +0.74 | ▶ +0.42 | | 4 | Information Technology
XLK | | +0.38 | Leaning Favorable | +0.59 | +0.50 | ▶ −0.04 | | 5 | Materials
XLB | | +0.36 | Leaning Favorable | +0.33 | +0.58 | ▼ −0.32 | | 6 | Financials
XLF | | +0.30 | Leaning Favorable | +0.34 | +0.54 | ▶ +0.23 | | 7 | Consumer Staples
XLP | | +0.28 | Leaning Favorable | +0.38 | +0.50 | ▲ +0.36 | | 8 | Communication Services
XLC | | +0.26 | Leaning Favorable | +0.06 | +0.53 | ▶ +0.06 | | 9 | Utilities
XLU | | +0.20 | Leaning Favorable | +0.00 | +0.50 | ▶ +0.00 | | 10 | Health Care
XLV | | +0.19 | Leaning Favorable | +0.02 | +0.50 | ▶ −0.07 | | 11 | Real Estate
XLRE | | −0.23 | Leaning Unfavorable | −0.94 | −0.06 | ▶ +0.11 |
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 | | +0.75 |
Moderate expansion; improving in four districts, modest-to-moderate in six. | Labor markets firming somewhat; modest hiring beyond replacement, little wage pressure. | | Inflation Pressure (higher = headwind) | | +0.50 |
Cost pressures spreading (food, metals, petroleum) but modest pass-through. | Loan demand mixed; credit quality improving in most districts; standards easing slightly. | Contacts positive but cautious about 2011; planned hiring increases. |
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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 | · | +1 | −1 | | FinancialsXLF | · | +1 | +1 | · | +1 | · | +1 | −1 | −1 | · | −1 | · | | Consumer DiscretionaryXLY | +1 | +1 | +1 | +1 | +2 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | | Communication ServicesXLC | +1 | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | +1 | +1 | +2 | +1 | +2 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | +1 | · | · | · | · | · | +1 | +1 | | EnergyXLE | · | · | · | · | · | +1 | · | +1 | +1 | +1 | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | −1 | −1 | −1 | · | −1 | −1 | −1 | −1 | −1 | −1 | −1 | | MaterialsXLB | · | · | +1 | +1 | +1 | · | +1 | · | +1 | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Richmond, Chicago Manufacturing posted solid gains; Chicago order backlogs increased substantially. Why it matters: Two +2 reads in Industrials, with Chicago carrying a large Industrials weight. | Consumer Discretionary +2 Richmond Retailers reported a surge in December sales. Why it matters: Strongest Discretionary read amid broad +1s. | Energy +2 Dallas Energy sector a continued source of strength; drilling high. Why it matters: Dallas carries 45% of Energy weight. | Consumer Discretionary +1 broad−based All districts Holiday sales higher than 2009 and in some cases better than expected. Why it matters: Breadth lifts Discretionary across all weights. | Real Estate −1 broad−based Most districts Residential real estate markets remained weak across all districts. Why it matters: Broad negative keeps Real Estate the weakest sector. | Information Technology +1 San Francisco Demand grew further for semiconductors; tech services sales expanded. Why it matters: SF carries 47% of IT weight. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Conditions continue to improve. |
| New York Growing +1.0 Outlook ▲ Further signs of improvement; widespread optimism. |
| Philadelphia Growing +0.5 Outlook ▲ Improved somewhat. |
| Cleveland Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| Richmond Growing +1.0 Outlook ▲ Improved over the last four to six weeks. |
| Atlanta Growing +1.0 Outlook ▲ Rose moderately. |
| Chicago Growing +1.0 Outlook ▲ Increased further; cautiously optimistic. |
| St. Louis Growing +0.5 Outlook ▲ Increased modestly. |
| Minneapolis Growing +1.0 Outlook ▲ Continued its moderate recovery. |
| Kansas City Growing +1.0 Outlook ▲ Continued to expand. |
| Dallas Growing +1.0 Outlook ▲ Expanded moderately. |
| San Francisco Growing +0.5 Outlook ▲ Firmed further. |
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Where the signal is thin or split Divergences to watch | Real Estate — the only clearly negative sector; housing weak everywhere while other sectors improved.
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| | Information Technology — San Francisco semiconductor and tech services strength drives the weighted score above the unweighted average.
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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 |