EconomyxAI · Sector Watch January 2017Released January 18, 2017 |
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Conditions index +0.43 avg of 11 sectors, −2 to +2 |
| Outlook index +0.39 sectors with an outlook |
| Districts growing 11/12 per National Summary |
| Positive momentum 7/11 sectors improving |
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This release in brief The read | ■ | Released January 18, 2017, with information collected on or before January 9, 2017. | | ■ | The economy continued to expand at a modest pace across most regions; Richmond, Dallas and San Francisco moderate, New York steady, Cleveland slight. | | ■ | Manufacturers in most districts reported increased sales with several citing a turnaround; energy mixed but improving in oil and gas. | | ■ | Holiday retail sales disappointing in several districts, labor markets tight, pricing pressures intensified somewhat, and firms optimistic about 2017. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▲ Improving | +0.76 |
| Information Technology
XLK
▲ Turning up | +0.68 |
| Energy
XLE
▲ Turning up | +0.55 |
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| Weakest prospects Health Care
XLV
▶ Steady | −0.06 |
| Utilities
XLU
▶ Steady | −0.01 |
| Consumer Staples
XLP
▶ Steady | +0.12 |
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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 | | +0.76 | Favorable | +0.97 | +0.88 | ▲ +0.69 | | 2 | Information Technology
XLK | | +0.68 | Favorable | +1.01 | +0.73 | ▲ +0.34 | | 3 | Energy
XLE | | +0.55 | Favorable | +0.52 | +0.78 | ▲ +0.35 | | 4 | Real Estate
XLRE | | +0.44 | Leaning Favorable | +0.92 | +0.47 | ▶ −0.15 | | 5 | Consumer Discretionary
XLY | | +0.34 | Leaning Favorable | +0.50 | +0.47 | ▲ +0.26 | | 6 | Financials
XLF | | +0.28 | Leaning Favorable | +0.38 | +0.50 | ▶ −0.12 | | 7 | Materials
XLB | | +0.28 | Leaning Favorable | −0.13 | +0.50 | ▲ +0.24 | | 8 | Communication Services
XLC | | +0.19 | Leaning Favorable | +0.40 | +0.00 | ▶ +0.20 | | 9 | Consumer Staples
XLP | | +0.12 | Neutral | +0.22 | +0.00 | ▶ +0.29 | | 10 | Utilities
XLU | | −0.01 | Neutral | +0.00 | +0.00 | ▶ −0.08 | | 11 | Health Care
XLV | | −0.06 | Neutral | −0.09 | +0.00 | ▶ −0.21 |
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 pace across most regions; several moderate. | Labor markets tight or tightening; wage pressures increased. | | Inflation Pressure (higher = headwind) | | +0.50 |
Pricing pressures intensified somewhat; input costs rising. | Financial conditions stable; loan demand steady to improved. | Firms across industries optimistic about growth in 2017. |
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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 | · | · | · | · | · | · | · | · | · | · | +2 | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | −1 | · | | FinancialsXLF | · | · | +1 | +1 | · | · | +1 | +1 | · | · | · | +1 | | Consumer DiscretionaryXLY | · | −1 | +1 | −1 | +2 | +1 | +1 | · | −1 | +1 | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | +1 | +1 | · | +1 | +1 | +2 | +1 | +1 | +2 | +1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | +1 | | EnergyXLE | · | · | · | +1 | +1 | −1 | · | −1 | · | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | · | · | +1 | · | +1 | · | +1 | +1 | · | +1 | +2 | | 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 Chicago, Kansas City Manufacturing robust; fastest growth in over two years. Why it matters: Largest Industrials reads. | Industrials +1 broad−based Broad-based Manufacturers in most Districts reported increased sales. Why it matters: Turnaround in manufacturing. | Information Technology +2 San Francisco Demand for IT business services remained strong. Why it matters: SF carries 47% of IT weight. | Real Estate +2 San Francisco Real estate grew at a strong pace. Why it matters: Large RE weight. | Consumer Discretionary +2 Richmond Retail sales rose briskly. Why it matters: CD lift. | Consumer Discretionary −1 New York, Cleveland, Minneapolis Holiday sales disappointing. Why it matters: CD offsets. |
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Twelve Fed districts District roundup Boston Growing +0.8 Outlook ▲ Modest to moderate pace. |
| New York Flat Outlook ▲ Held steady. |
| Philadelphia Growing +0.5 Outlook ▲ Picked up to a modest pace. |
| Cleveland Growing +0.2 Outlook ▲ Grew slightly. |
| Richmond Growing +1.0 Outlook ▲ Increased at a moderate pace. |
| Atlanta Growing +0.5 Outlook ▲ Expanded modestly. |
| Chicago Growing +0.5 Outlook ▲ Continued at a modest pace. |
| St. Louis Growing +0.5 Outlook ▲ Expand at a modest pace. |
| Minneapolis Growing +0.5 Outlook ▲ Grew modestly. |
| Kansas City Growing +0.5 Outlook ▲ Expanded modestly. |
| Dallas Growing +1.0 Outlook ▲ Grew moderately. |
| San Francisco Growing +1.0 Outlook ▲ Moderate pace. |
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Where the signal is thin or split Divergences to watch | Industrials — Two +2 reads plus broad +1 drive Industrials to a strong positive.
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| | Information Technology — San Francisco +2 dominates weighted IT.
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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 |