EconomyxAI · Beige Book Sector Monitor July 1998Released August 5, 1998 · Data through July 27 |
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Conditions index +0.27 avg of 11 sectors, −2 to +2 |
| Outlook index +0.17 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Activity stayed high with further expansion, but growth moderated in some regions and sectors. | | ■ | Retail sales were in line with expectations in most districts and strong in Boston, Cleveland, Dallas and Minneapolis; summer tourism picked up. | | ■ | Manufacturing remained high but slowed, damped by the GM strike, weaker exports and a general high-tech slowdown; apparel, computing, machinery, paper and wood fell. | | ■ | Robust home and commercial real estate sales kept fueling construction; Manhattan Class A rents were up 25% from a year earlier. | | ■ | Labor markets were tight in every district but general wage increases stayed limited, and goods prices were stable as input prices fell; drilling kept slowing. |
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Sector prospects Where the 3–12 month view points Strongest prospects Real Estate
XLRE
▶ Steady | +0.48 |
| Financials
XLF
▶ Steady | +0.39 |
| Consumer Discretionary
XLY
▼ Weakening | +0.38 |
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| Weakest prospects | Materials
XLB
▶ Steady | −0.34 |
| Information Technology
XLK
▲ Turning up | −0.01 |
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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 | Real Estate
XLRE | | +0.48 | Leaning Favorable | +1.33 | +0.00 | ▶ −0.01 | | 2 | Financials
XLF | | +0.39 | Leaning Favorable | +0.89 | +0.00 | ▶ +0.12 | | 3 | Consumer Discretionary
XLY | | +0.38 | Leaning Favorable | +0.62 | +0.76 | ▼ −0.31 | | 4 | Communication Services
XLC | | +0.29 | Leaning Favorable | +0.40 | n/a | ▶ +0.00 | | 5 | Utilities
XLU | | +0.19 | Leaning Favorable | +0.12 | n/a | ▶ +0.12 | | 6 | Health Care
XLV | | +0.07 | Neutral | +0.00 | n/a | ▶ −0.10 | | 7 | Industrials
XLI | | +0.00 | Neutral | +0.40 | −0.09 | ▶ −0.36 | | 8 | Consumer Staples
XLP | | −0.00 | Neutral | +0.00 | n/a | ▶ −0.04 | | 9 | Information Technology
XLK | | −0.01 | Neutral | +0.06 | n/a | ▲ +0.44 | | 10 | Materials
XLB | | −0.34 | Leaning Unfavorable | −0.30 | n/a | ▶ −0.42 | | 11 | Energy
XLE | | −0.44 | Leaning Unfavorable | −0.51 | n/a | ▶ −0.14 |
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 | | +1.00 |
Districts reported a high level of activity and further expansion, but growth moderated in some regions and sectors; labor shortages, shipping bottlenecks, East Asia and the GM strike were beginning to temper growth. | Labor markets were tight in every district with broad-based shortages, but general wage increases stayed limited as employers used one-time payments; a Chicago staffing firm saw some softening in labor demand. | | Inflation Pressure (higher = headwind) | | −0.25 |
Goods prices were stable, input prices flat or falling, and manufacturers and retailers said price increases could not stick; only scattered service price increases. | Loan demand was steady but strong, credit conditions accommodative, quality borrowers received good terms, and delinquencies fell in several districts; St. Louis loans outstanding declined. | Retailers and tourism contacts were optimistic, but Philadelphia manufacturers expect a slower second half, Boston exporters expect Asia to depress 1999 revenues, and San Francisco expects a tempered year. |
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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 | · | · | · | · | · | · | · | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | +1 | +1 | · | +1 | +1 | +1 | +1 | · | · | +1 | +1 | +1 | | Consumer DiscretionaryXLY | +1 | · | +1 | +1 | · | · | · | · | +2 | +1 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | · | · | · | +1 | +1 | · | +1 | +1 | · | +1 | · | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | −1 | · | · | · | · | −1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | +1 | · | | Real EstateXLRE | +1 | +2 | · | +1 | +1 | +1 | +2 | +2 | +2 | +1 | +2 | +1 | | MaterialsXLB | · | · | −1 | −1 | · | −1 | · | +1 | · | · | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Information Technology 0 San Francisco High-tech 'slowed markedly' but 'growth remains positive and most companies continue to prosper'. Why it matters: San Francisco is 47% of IT; moving from -1 to 0 is the largest swing this release. | Energy −1 Dallas Continued slowing in gas and oil drilling; rig count fell from 860 to 810. Why it matters: Dallas carries 45% of Energy. | Real Estate +2 New York, Chicago, St. Louis, Minneapolis, Dallas 'Sizzling home market'; home construction 'exploded'. Why it matters: Five +2s keep Real Estate firmly the strongest sector. | Industrials +1 Chicago Manufacturing very high but slowed by GM strikes. Why it matters: Losing Chicago's +2 pulls Industrials down. | Industrials 0 Boston, Minneapolis Close to half of Boston manufacturers cutting jobs; a Minnesota maker cuts 4,000 positions. Why it matters: Broadening manufacturing slowdown. | Materials −1 Cleveland, Philadelphia, Atlanta, Dallas Steel sales down on record imports; chemical margins narrowing. Why it matters: Four -1s turn Materials negative. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Mixed, although growth continues overall. |
| New York Growing +1.0 Continued to grow briskly. |
| Philadelphia Growing +1.0 Outlook ▶ High level, but growth eased. |
| Cleveland Growing +1.0 Slackened a bit; still strong overall. |
| Richmond Growing +1.0 Outlook ▲ Continued to grow at a moderate pace. |
| Atlanta Growing +1.0 Outlook ▲ Growth remained steady; outlook positive. |
| Chicago Growing +1.0 Quite strong, hampered by GM strikes. |
| St. Louis Growing +1.0 Outlook ▲ Economic activity remains robust. |
| Minneapolis Growing +1.0 Outlook ▶ Growth predominates, but ill winds from Asia. |
| Kansas City Growing +1.0 Outlook ▲ Grew moderately, no major signs of easing. |
| Dallas Growing +1.0 Outlook ▲ Expanded at about the same modest pace. |
| San Francisco Growing +1.0 Outlook ▲ Solid pace with moderation in some sectors. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco (47%) back to 0 lifts weighted IT to about neutral, though price commentary stays sharply negative.
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| | Industrials — the GM strike and Asia cut Industrials to six positive districts and no +2s, its weakest reading of the year.
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| | Materials — four -1s against St. Louis +1 turn the sector negative on steel, chemicals and paper.
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| | Energy — Dallas (45%) -1 keeps weighted Energy negative while Minneapolis and Kansas City stabilize at 0.
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| | HEALTH CARE and CONSUMER STAPLES: no directional coverage.
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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 |