EconomyxAI · Sector Watch January 2019Released January 16, 2019 |
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Conditions index +0.02 avg of 11 sectors, −2 to +2 |
| Outlook index +0.05 sectors with an outlook |
| Districts growing 9/12 per National Summary |
| Positive momentum 2/11 sectors improving |
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This release in brief The read | ■ | Released January 16, 2019, with information collected on or before January 7, 2019. | | ■ | Activity increased in most of the U.S., with eight of twelve districts reporting modest to moderate growth; New York leveled off and Kansas City was flat. | | ■ | Nonauto retail grew modestly on holiday traffic; manufacturing expanded in most districts but growth slowed, particularly for autos and energy. | | ■ | Home construction and sales little changed; energy slowed with lower oil prices; outlooks positive but less optimistic on market volatility, rates and trade. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Discretionary
XLY
▲ Turning up | +0.30 |
| Information Technology
XLK
▶ Steady | +0.22 |
| Materials
XLB
▶ Steady | +0.04 |
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| Weakest prospects Energy
XLE
▼ Turning down | −0.47 |
| Financials
XLF
▼ Weakening | −0.26 |
| Industrials
XLI
▼ Weakening | −0.14 |
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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 Discretionary
XLY | | +0.30 | Leaning Favorable | +0.55 | +0.39 | ▲ +0.07 | | 2 | Information Technology
XLK | | +0.22 | Leaning Favorable | +0.15 | +0.50 | ▶ −0.12 | | 3 | Materials
XLB | | +0.04 | Neutral | +0.11 | +0.00 | ▶ +0.01 | | 4 | Real Estate
XLRE | | +0.02 | Neutral | +0.15 | +0.03 | ▶ −0.20 | | 5 | Communication Services
XLC | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 6 | Utilities
XLU | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 7 | Consumer Staples
XLP | | −0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 8 | Health Care
XLV | | −0.02 | Neutral | +0.00 | +0.00 | ▶ −0.10 | | 9 | Industrials
XLI | | −0.14 | Neutral | +0.12 | +0.07 | ▼ −0.76 | | 10 | Financials
XLF | | −0.26 | Leaning Unfavorable | −0.43 | +0.05 | ▼ −0.66 | | 11 | Energy
XLE | | −0.47 | Leaning Unfavorable | −0.43 | −0.46 | ▼ −0.59 |
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 | | +0.25 |
Eight districts modest to moderate; New York leveled off; Kansas City flat; Dallas slowed. | Employment up modestly; labor tight in all districts; wages moderate. | | Inflation Pressure (higher = headwind) | | +0.50 |
Modest to moderate price increases; tariffs and freight lifting costs, fuel down. | Lending volumes grew modestly with some slowing. | Outlooks positive but many contacts less optimistic. |
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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 | · | · | · | · | · | · | · | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | −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 | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | +1 | +1 | · | · | −1 | · | −1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | −1 | −1 | · | +1 | · | · | · | · | · | · | +1 | | MaterialsXLB | · | · | · | · | +1 | · | · | +1 | · | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy −1 Dallas Drilling flat; firms cut 2019 capex on lower oil. Why it matters: Dallas carries the largest Energy weight. | Industrials −1 New York Manufacturing sharply decelerated; distribution declined. Why it matters: Large Industrials weight. | Industrials −1 Richmond, Atlanta Shipments, orders and production declined. Why it matters: Industrials negatives. | Financials −1 New York Lower demand for consumer, mortgage and C&I loans. Why it matters: NY weight trims Financials. | Consumer Discretionary +1 broad−based Broad-based Holiday retail sales solid. Why it matters: Discretionary positive across eight districts. | Consumer Discretionary −1 Dallas Retail and auto sales weakened. Why it matters: Discretionary offset. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Expanded modestly to moderately. |
| New York Flat Outlook ▶ Leveled off. |
| Philadelphia Growing +0.5 Outlook ▲ Maintained a modest pace. |
| Cleveland Flat Outlook ▶ Increased slightly. |
| Richmond Growing +0.5 Outlook ▶ Expanded at a modest rate. |
| Atlanta Growing +1.0 Outlook ▲ Grew at a moderate pace. |
| Chicago Growing +0.5 Outlook ▲ Grew at a modest pace. |
| St. Louis Growing +0.5 Outlook ▲ Slightly improved. |
| Minneapolis Growing +0.5 Outlook ▲ Grew modestly overall. |
| Kansas City Flat Outlook ▲ Roughly flat. |
| Dallas Growing +0.5 Outlook ▼ Slowed to a more modest 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 -1 with its large Energy weight pulls weighted Energy negative.
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| | Industrials — New York -1 and Dallas 0 cut weighted Industrials sharply from prior releases.
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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 |