EconomyxAI · Sector Watch July 2004Released July 28, 2004 |
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Conditions index +0.49 avg of 11 sectors, −2 to +2 |
| Outlook index +0.10 sectors with an outlook |
| Districts growing 11/12 per National Summary |
| Positive momentum 2/11 sectors improving |
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This release in brief The read | ■ | Released July 28, 2004, with information collected before July 19, 2004. | | ■ | Activity continued to expand in June and early July but several districts said growth moderated; growth ranged from modest (Minneapolis) to solid (Chicago), and five districts said it slowed. | | ■ | Consumer spending softened in seven districts after strong spring gains, and auto sales were flat to down nearly everywhere except St. Louis. | | ■ | Manufacturing production rose in every district with scattered input shortages and longer lead times; shipping and rail demand was high and commercial borrowing rose in nine districts. | | ■ | Energy, steel and cement prices moved higher in most districts, but no district reported accelerating retail prices; wage gains stayed moderate. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.48 |
| Financials
XLF
▼ Weakening | +0.36 |
| Real Estate
XLRE
▶ Steady | +0.36 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | −0.07 |
| Consumer Discretionary
XLY
▼ Weakening | −0.03 |
| Utilities
XLU
▶ Steady | +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 | Industrials
XLI | | +0.48 | Leaning Favorable | +1.00 | +0.54 | ▶ −0.14 | | 2 | Financials
XLF | | +0.36 | Leaning Favorable | +0.73 | +0.50 | ▼ −0.30 | | 3 | Real Estate
XLRE | | +0.36 | Leaning Favorable | +1.09 | −0.02 | ▶ +0.17 | | 4 | Materials
XLB | | +0.27 | Leaning Favorable | +0.61 | +0.00 | ▼ −0.32 | | 5 | Energy
XLE | | +0.19 | Leaning Favorable | +0.26 | +0.05 | ▼ −0.38 | | 6 | Communication Services
XLC | | +0.16 | Leaning Favorable | +0.47 | +0.00 | ▶ +0.07 | | 7 | Health Care
XLV | | +0.13 | Neutral | +0.29 | +0.00 | ▶ +0.00 | | 8 | Information Technology
XLK | | +0.09 | Neutral | +0.54 | +0.00 | ▼ −0.38 | | 9 | Utilities
XLU | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 10 | Consumer Discretionary
XLY | | −0.03 | Neutral | +0.37 | +0.04 | ▼ −0.83 | | 11 | Consumer Staples
XLP | | −0.07 | Neutral | +0.00 | +0.00 | ▶ −0.08 |
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 |
Continued expansion though several districts moderated; six modest-to-solid, five slowed, Boston mixed. | Most districts reported strengthening labor markets; limited occupational shortages; modest wage increases. | | Inflation Pressure (higher = headwind) | | +0.75 |
Energy, steel and cement prices high and rising; food prices adding pressure; retail inflation moderate with partial pass-through. | Commercial borrowing rose in nine districts; mortgage originations robust while refinancing fell further. | Some indications of increased spending in early July; capital stock expansion continuing at a moderate pace in three districts. |
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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 | +1 | · | · | · | · | · | · | · | · | · | · | +1 | | FinancialsXLF | · | +1 | +1 | +1 | +1 | +1 | · | +1 | · | +1 | · | +1 | | Consumer DiscretionaryXLY | · | +1 | · | · | −1 | · | · | +1 | +1 | · | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | +1 | +1 | | IndustrialsXLI | +1 | +1 | +1 | +1 | · | +1 | +1 | +1 | +1 | +2 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +2 | · | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | · | −1 | +1 | +1 | +1 | +1 | · | · | +1 | +2 | | MaterialsXLB | · | · | +1 | +1 | · | +1 | +2 | · | +1 | · | +1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Kansas City Manufacturing grew strongly; firms adding shifts. Why it matters: Industrials strength. | Industrials +1 broad−based Broad-based Manufacturing and trucking up in ten districts. Why it matters: Broad Industrials strength. | Real Estate +2 San Francisco Residential demand vigorous; industrial prices up 40 percent. Why it matters: Large Real Estate weight. | Materials +2 Chicago No letup in steel, gypsum and cement demand. Why it matters: Materials strength. | Energy +2 Kansas City Rig count up strongly from a year ago. Why it matters: Energy positive. | Financials +1 New York, San Francisco, Philadelphia, Cleveland Business loan demand rising. Why it matters: Financials positive. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Somewhat more mixed. |
| New York Growing +1.0 Outlook ▲ Growth moderated somewhat. |
| Philadelphia Growing +1.0 Outlook ▲ Rising moderately. |
| Cleveland Flat Outlook ▶ Pace appeared to slow. |
| Richmond Growing +0.5 Outlook ▲ Expanded at a more moderate pace. |
| Atlanta Growing +0.5 Outlook ▲ Remained positive. |
| Chicago Growing +1.5 Outlook ▲ Continued to expand solidly. |
| St. Louis Growing +1.0 Outlook ▲ Continued to improve. |
| Minneapolis Growing +0.5 Outlook ▲ Grew modestly. |
| Kansas City Growing +1.0 Outlook ▲ Expanded at a slightly slower pace. |
| Dallas Growing +1.0 Outlook ▲ Continued to expand. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a solid pace. |
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Where the signal is thin or split Divergences to watch | Consumer Discretionary — the move from broad +1s to mostly zeros marks the clearest deceleration of the release.
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| | Real Estate — San Francisco's +2 carries a large weight and keeps the weighted score above the simple 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 |