EconomyxAI · Sector Watch January 2018Released January 17, 2018 |
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Conditions index +0.48 avg of 11 sectors, −2 to +2 |
| Outlook index +0.35 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 5/11 sectors improving |
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This release in brief The read | ■ | Released January 17, 2018, with information collected on or before January 8, 2018. | | ■ | Eleven districts reported modest to moderate gains and Dallas a robust increase; the 2018 outlook remained optimistic for most contacts. | | ■ | Nonauto retail expanded with some holiday sales above expectations; autos mixed; manufacturing grew modestly with some capital spending increases. | | ■ | Residential real estate constrained by limited inventory; nonresidential grew slightly; transportation growing; loan volumes steady; energy ticked up. |
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Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▲ Improving | +0.80 |
| Industrials
XLI
▶ Steady | +0.57 |
| Real Estate
XLRE
▲ Improving | +0.56 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | −0.03 |
| Communication Services
XLC
▶ Steady | −0.02 |
| Utilities
XLU
▶ Steady | +0.00 |
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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 | | +0.80 | Favorable | +1.05 | +0.78 | ▲ +0.93 | | 2 | Industrials
XLI | | +0.57 | Favorable | +1.12 | +0.56 | ▶ +0.06 | | 3 | Real Estate
XLRE | | +0.56 | Favorable | +0.94 | +0.50 | ▲ +0.35 | | 4 | Consumer Discretionary
XLY | | +0.53 | Favorable | +0.98 | +0.50 | ▲ +0.33 | | 5 | Materials
XLB | | +0.43 | Leaning Favorable | +0.45 | +0.50 | ▶ +0.29 | | 6 | Information Technology
XLK | | +0.34 | Leaning Favorable | +0.60 | +0.54 | ▼ −0.31 | | 7 | Financials
XLF | | +0.25 | Leaning Favorable | +0.13 | +0.54 | ▶ −0.26 | | 8 | Health Care
XLV | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Utilities
XLU | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 10 | Communication Services
XLC | | −0.02 | Neutral | +0.00 | +0.00 | ▶ −0.20 | | 11 | Consumer Staples
XLP | | −0.03 | Neutral | +0.00 | +0.00 | ▶ −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 |
Eleven districts modest to moderate; Dallas robust. | Employment grew modestly; tightness constraining growth; wages modest. | | Inflation Pressure (higher = headwind) | | +0.50 |
Modest to moderate price growth; input costs rising in manufacturing, construction and transport. | Loan volumes steady in many districts; Dallas stronger, New York weaker. | Outlook for 2018 optimistic; tax bill expected to boost activity. |
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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 | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | −1 | +1 | +1 | +1 | · | +1 | +1 | · | · | +2 | · | | Consumer DiscretionaryXLY | · | · | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +2 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +2 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | +1 | +1 | · | · | · | · | +1 | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | · | · | +1 | +1 | +1 | · | +1 | +1 | −1 | +1 | +2 | | MaterialsXLB | · | · | +1 | +1 | · | · | · | · | +1 | · | +2 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Dallas Broad-based acceleration across manufacturing. Why it matters: Strong Industrials read. | Energy +2 Dallas Drilling in Permian and Eagle Ford increased. Why it matters: Dallas carries the largest Energy weight. | Consumer Discretionary +2 Dallas Auto industry very strong with notable pickup. Why it matters: Strong Discretionary read. | Consumer Discretionary +1 broad−based Broad-based Holiday sales higher than expected. Why it matters: Discretionary positive across nine districts. | Industrials +1 broad−based Broad-based Manufacturing and transportation grew. Why it matters: Industrials positive everywhere. | Real Estate +2 San Francisco Residential real estate remained robust. Why it matters: SF carries large Real Estate weight. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Expanded modestly. |
| New York Growing +1.0 Outlook ▲ Continued to grow moderately. |
| Philadelphia Growing +0.5 Outlook ▲ Continued at a modest pace. |
| Cleveland Growing +1.0 Outlook ▲ Grew at a moderate pace. |
| Richmond Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Atlanta Growing +0.5 Outlook ▲ Improving at a modest pace. |
| Chicago Growing +1.0 Outlook ▲ Picked up to a moderate pace. |
| St. Louis Growing +0.5 Outlook ▲ Continued to improve modestly. |
| Minneapolis Growing +1.0 Outlook ▲ Increased moderately. |
| Kansas City Growing +0.5 Outlook ▲ Increased at a modest pace. |
| Dallas Growing +2.0 Outlook ▲ Expanded at a robust pace. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
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Where the signal is thin or split Divergences to watch | Energy — Dallas +2 with its large Energy weight drives the weighted score well above the unweighted average.
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| | Financials — Dallas +2 outweighs the New York -1 despite NY's large weight.
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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 |