EconomyxAI · Sector Watch January 2020Released January 15, 2020 |
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Conditions index +0.15 avg of 11 sectors, −2 to +2 |
| Outlook index +0.18 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 7/11 sectors improving |
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This release in brief The read | ■ | Released January 15, 2020, with information collected on or before January 6, 2020. | | ■ | Activity generally continued to expand modestly in the final six weeks of 2019; Dallas and Richmond grew faster while Philadelphia, St. Louis and Kansas City lagged. | | ■ | Consumer spending grew modestly to moderately with solid holiday sales and moderate vehicle sales; manufacturing essentially flat; transportation flat to weaker. | | ■ | Loan volumes steady to moderately higher; home sales flat overall; new residential construction expanded modestly; energy little changed; outlooks modestly favorable. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Discretionary
XLY
▲ Improving | +0.58 |
| Real Estate
XLRE
▶ Steady | +0.41 |
| Information Technology
XLK
▶ Steady | +0.32 |
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| Weakest prospects | Utilities
XLU
▶ Steady | −0.01 |
| Consumer Staples
XLP
▶ 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 | Consumer Discretionary
XLY | | +0.58 | Favorable | +1.05 | +0.56 | ▲ +0.43 | | 2 | Real Estate
XLRE | | +0.41 | Leaning Favorable | +0.66 | +0.46 | ▶ +0.10 | | 3 | Information Technology
XLK | | +0.32 | Leaning Favorable | +0.16 | +0.55 | ▶ +0.14 | | 4 | Financials
XLF | | +0.25 | Leaning Favorable | +0.31 | +0.50 | ▲ +0.10 | | 5 | Industrials
XLI | | +0.13 | Neutral | −0.05 | +0.46 | ▶ +0.00 | | 6 | Materials
XLB | | +0.04 | Neutral | −0.07 | +0.00 | ▶ +0.14 | | 7 | Health Care
XLV | | +0.03 | Neutral | +0.15 | +0.00 | ▶ −0.08 | | 8 | Communication Services
XLC | | +0.02 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Consumer Staples
XLP | | −0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 10 | Utilities
XLU | | −0.01 | Neutral | +0.00 | +0.00 | ▶ −0.09 | | 11 | Energy
XLE | | −0.33 | Leaning Unfavorable | −0.51 | −0.50 | ▶ +0.02 |
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 expansion; Dallas and Richmond above average. | Employment steady to rising modestly; tight labor; modest-to-moderate wages. | | Inflation Pressure (higher = headwind) | | +0.25 |
Prices and input costs rose modestly; retail prices slightly faster. | Loan volume steady to expanding moderately. | Near-term outlook modestly favorable; trade deal progress lifted Dallas. |
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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 | +2 | · | · | · | · | · | · | · | · | +1 | · | · | | Health CareXLV | +1 | · | · | · | +1 | · | · | · | · | · | · | · | | FinancialsXLF | · | · | +1 | · | +1 | +1 | −1 | +1 | · | +1 | · | +1 | | Consumer DiscretionaryXLY | +1 | +1 | +1 | +2 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | · | · | −1 | −1 | · | −1 | · | −1 | +1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | −1 | · | −1 | −1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | · | −1 | +1 | +1 | +1 | +1 | −1 | · | · | +1 | +1 | | MaterialsXLB | · | · | · | · | · | · | +1 | +1 | · | · | · | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Consumer Discretionary +1 broad−based Broad-based Holiday sales solid; vehicle sales expanded moderately. Why it matters: Discretionary positive in every district. | Consumer Discretionary +2 Cleveland Significant sales gains exceeding the typical holiday pickup. Why it matters: Strongest Discretionary read. | Information Technology +2 Boston Software and IT services cited relatively strong growth. Why it matters: Strongest IT read. | Energy −1 Dallas Energy sector remained weak; headcounts expected to fall. Why it matters: Dallas carries the largest Energy weight. | Real Estate +1 San Francisco Residential real estate expanded strongly. Why it matters: SF carries large RE weight. | Industrials −1 Richmond, Atlanta, St. Louis, Kansas City Manufacturing shipments and orders dropped. Why it matters: Industrials drag. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Modest to moderate pace; IT strong. |
| New York Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| Philadelphia Growing +0.5 Outlook ▲ Slowed to a slight pace. |
| Cleveland Growing +0.5 Outlook ▲ Modest, steady pace. |
| Richmond Growing +1.0 Outlook ▲ Grew moderately. |
| Atlanta Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| Chicago Growing +0.5 Outlook ▲ Increased modestly. |
| St. Louis Growing +0.5 Outlook ▲ Slightly improved. |
| Minneapolis Growing +0.5 Outlook ▲ Grew at a modest pace. |
| Kansas City Growing +0.5 Outlook ▲ Edged up. |
| Dallas Growing +1.5 Outlook ▲ Expanded solidly. |
| San Francisco Growing +0.5 Outlook ▲ Expanded at a modest pace. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco 0 at 47% weight dilutes Boston's +2, so weighted IT trails the unweighted read of Boston.
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| | Energy — Dallas -1 with the largest Energy weight drives the weighted score below 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 |