EconomyxAI · Sector Watch July 2001Released August 8, 2001 |
| |
Conditions index −0.39 avg of 11 sectors, −2 to +2 |
| Outlook index −0.45 sectors with an outlook |
| Districts growing 0/12 per National Summary |
| Positive momentum 3/11 sectors improving |
|
|
This release in brief The read | ■ | Most districts reported slow growth or lateral movement in June and July. | | ■ | Retail sales were sluggish and often below expectations despite heavy discounting; business travel and hotel occupancy fell. | | ■ | Manufacturing declined further in nearly all sectors and regions, with weakness spreading to office demand, trucking and shipping. | | ■ | Residential real estate stayed stable on lower mortgage rates, while office vacancies rose in nine districts. | | ■ | Energy and fuel prices fell in most regions; Dallas reported drilling has probably peaked and refining margins collapsed. |
|
Sector prospects Where the 3–12 month view points Strongest prospects Consumer Staples
XLP
▶ Steady | +0.09 |
| Health Care
XLV
▶ Steady | +0.08 |
| Utilities
XLU
▶ Steady | +0.06 |
|
|
| Weakest prospects Energy
XLE
▼ Turning down | −0.73 |
| Materials
XLB
▶ Steady | −0.63 |
| Industrials
XLI
▶ Steady | −0.53 |
|
|
|
|
All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
|---|
| 1 | Consumer Staples
XLP | | +0.09 | Neutral | +0.11 | n/a | ▶ +0.11 | | 2 | Health Care
XLV | | +0.08 | Neutral | +0.08 | n/a | ▶ −0.06 | | 3 | Utilities
XLU | | +0.06 | Neutral | +0.00 | n/a | ▶ −0.03 | | 4 | Communication Services
XLC | | −0.16 | Leaning Unfavorable | −0.07 | n/a | ▲ +0.15 | | 5 | Real Estate
XLRE | | −0.28 | Leaning Unfavorable | −0.39 | −0.21 | ▶ −0.18 | | 6 | Financials
XLF | | −0.28 | Leaning Unfavorable | −0.42 | −0.38 | ▼ −0.52 | | 7 | Information Technology
XLK | | −0.45 | Leaning Unfavorable | −0.82 | −0.24 | ▲ +0.42 | | 8 | Consumer Discretionary
XLY | | −0.47 | Leaning Unfavorable | −0.64 | −0.41 | ▶ −0.21 | | 9 | Industrials
XLI | | −0.53 | Unfavorable | −1.00 | +0.00 | ▶ −0.11 | | 10 | Materials
XLB | | −0.63 | Unfavorable | −0.88 | −1.00 | ▶ −0.09 | | 11 | Energy
XLE | | −0.73 | Unfavorable | −0.29 | −0.91 | ▼ −1.35 |
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 |
Most districts reported slow growth or lateral movement; manufacturing declined further in nearly all sectors and regions and weakness spilled into shipping and office demand. | Labor markets steady or loosening; layoffs widespread in high-tech and manufacturing, firms curtailing fall college recruiting. | | Inflation Pressure (higher = headwind) | | −0.50 |
Energy, fuel and many material input prices fell; shippers removed fuel surcharges; competition kept consumer prices in check. California electricity and prescription drugs the exceptions. | Reduced loan demand, tighter standards and stable-to-deteriorating credit quality, with residential mortgages the exception. | Retailers lowering expectations and cutting back-to-school and Christmas orders; Dallas sees no improvement through year-end; Philadelphia and Richmond manufacturers still expect a fall pickup. |
|
Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
|---|
| Information TechnologyXLK | −1 | · | −1 | −1 | −1 | −1 | · | · | · | −1 | −1 | −1 | | Health CareXLV | +1 | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | · | −1 | · | −1 | · | −1 | −1 | · | +1 | −1 | −1 | | Consumer DiscretionaryXLY | −1 | −1 | −1 | −1 | −1 | · | −1 | · | · | · | · | −1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | −1 | · | | IndustrialsXLI | −1 | −1 | −1 | −1 | −1 | −1 | −1 | −1 | −1 | −1 | −1 | −1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | +1 | · | +1 | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | −1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | · | · | · | · | · | · | +1 | · | −1 | −1 | −1 | | MaterialsXLB | · | · | −1 | −1 | −1 | −1 | · | −1 | −1 | · | −2 | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
|
Top highlights What moved the scores Energy −1 Dallas The growing consensus is that domestic drilling activity has probably peaked for now. Why it matters: Dallas is 45% of Energy; swinging from +2 to -1 removes the sector's lead. | Industrials −1 broad−based All twelve districts Reports of reduced work hours, lost overtime, furloughs, shutdowns and layoffs were pervasive. Why it matters: Every district negative keeps Industrials near the bottom. | Materials −2 Dallas Petrochemicals: second quarter the worst since 1981. Why it matters: Dallas is the largest Materials weight. | Information Technology −1 San Francisco Investment in high-tech equipment and software remained depressed. Why it matters: San Francisco's 47% weight keeps IT negative, though less so than the prior -2. | Consumer Discretionary −1 broad−based Boston, New York, Philadelphia, Cleveland, Richmond, Chicago, San Francisco Retail sales below expectations despite substantial discounting. Why it matters: Seven negatives drive Discretionary lower. | Real Estate −1 San Francisco Sharp decline in demand for office space in San Francisco and Silicon Valley. Why it matters: San Francisco is 27% of Real Estate. |
|
Twelve Fed districts District roundup Boston Contracting −1.0 Outlook ▼ Economy continues to slow. |
| New York Flat Outlook ▼ Generally sluggish, except housing. |
| Philadelphia Flat Outlook ▲ Little or no improvement in July. |
| Cleveland Flat Outlook ▼ Continues to move laterally. |
| Richmond Flat Outlook ▲ Advanced at a slow pace. |
| Atlanta Flat Outlook ▼ Activity was sluggish. |
| Chicago Flat Outlook ▼ Overall activity was sluggish. |
| St. Louis Flat Outlook ▼ Growth remains slow. |
| Minneapolis Flat Economic activity is subdued. |
| Kansas City Contracting −1.0 Outlook ▼ Weakened further in July. |
| Dallas Contracting −1.0 Outlook ▼ Weakened further. |
| San Francisco Flat Continued slowing in growth. |
|
|
Where the signal is thin or split Divergences to watch | Energy — Dallas turns -1 after two +2 releases, and with 45% weight the weighted Energy score drops sharply even though three districts remain positive.
|
| | Industrials — all twelve districts -1, the broadest Industrials weakness in the series.
|
| | Information Technology — San Francisco eases from -2 to -1 as semiconductor orders picked up somewhat.
|
| | Real Estate — residential stability masks sharp office weakness; San Francisco and Dallas -1 weigh on the weighted score.
|
|
|
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 |