EconomyxAI · Beige Book Sector Monitor July 2006Released July 26, 2006 |
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Conditions index +0.31 avg of 11 sectors, −2 to +2 |
| Outlook index +0.09 sectors with an outlook |
| Districts growing 8/12 per National Summary |
| Positive momentum 2/11 sectors improving |
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This release in brief The read | ■ | Released July 26, 2006, with information collected before mid-July 2006 (date not printed in the PDF). | | ■ | Growth continued from June through mid-July, but six districts (Philadelphia, Cleveland, Richmond, Chicago, Dallas and San Francisco) reported a slower overall pace; San Francisco stayed solid while Atlanta and St. Louis were mixed. | | ■ | Retail sales were modest or disappointing as high gas prices squeezed budgets, auto sales were flat to down, and tourism remained at high levels. | | ■ | Manufacturing posted significant gains led by semiconductors, electrical equipment, aircraft and defense, while residential real estate cooled almost everywhere and commercial markets tightened further. | | ■ | Labor markets tightened a bit further with moderate overall wage gains; input costs stayed elevated but competition kept final price increases modest. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Industrials
XLI
▶ Steady | +0.48 |
| Information Technology
XLK
▶ Steady | +0.40 |
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| Weakest prospects Consumer Discretionary
XLY
▼ Weakening | −0.39 |
| Real Estate
XLRE
▼ Weakening | −0.34 |
| Utilities
XLU
▶ 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 | Energy
XLE | | +0.72 | Favorable | +1.26 | +1.00 | ▶ +0.00 | | 2 | Industrials
XLI | | +0.48 | Leaning Favorable | +0.83 | +0.50 | ▶ −0.15 | | 3 | Information Technology
XLK | | +0.40 | Leaning Favorable | +0.64 | +0.50 | ▶ +0.01 | | 4 | Financials
XLF | | +0.14 | Neutral | +0.59 | +0.00 | ▲ +0.10 | | 5 | Materials
XLB | | +0.09 | Neutral | +0.23 | +0.00 | ▶ −0.17 | | 6 | Health Care
XLV | | +0.08 | Neutral | +0.29 | +0.00 | ▶ −0.04 | | 7 | Communication Services
XLC | | +0.02 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 8 | Consumer Staples
XLP | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Utilities
XLU | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 10 | Real Estate
XLRE | | −0.34 | Leaning Unfavorable | −0.28 | −0.50 | ▼ −0.41 | | 11 | Consumer Discretionary
XLY | | −0.39 | Leaning Unfavorable | −0.18 | −0.50 | ▼ −0.79 |
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 |
Growth continued but six districts reported slower overall pace; San Francisco solid; Atlanta and St. Louis mixed. | Labor markets tightened a bit further; wages moderate overall but rapid for specialized skills. | | Inflation Pressure (higher = headwind) | | −0.50 |
Input-cost pressure persisted but final price increases modest; some moderation in prices for some items. | C&I lending expanded further while mortgages declined in most districts and consumer loans slowed. | Manufacturers in Boston, Philadelphia and Cleveland plan higher capital spending; Kansas City expectations low. |
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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 | | Consumer DiscretionaryXLY | · | · | · | −1 | −1 | · | · | · | · | +1 | −1 | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | · | · | +1 | +1 | +1 | +1 | · | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | +2 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −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 Energy +2 Dallas Rig count rising; heavy oil service backlogs. Why it matters: Largest Energy weight. | Industrials +1 broad−based Broad-based Manufacturing solid in nine districts. Why it matters: Broad Industrials support. | Financials +1 New York Securities conditions exceptionally strong in Q2. Why it matters: Largest Financials weight. | Real Estate −1 Boston, Cleveland, Richmond, Atlanta Home sales falling; prices flat to down. Why it matters: Real Estate drag. | Consumer Discretionary −1 Dallas, Cleveland, Richmond Retail softened on high gasoline prices. Why it matters: Discretionary drag. | Information Technology +1 San Francisco Semiconductor utilization above 90%. Why it matters: Largest IT weight. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Many segments continue to grow. |
| New York Growing +0.5 Outlook ▲ Grew at a moderate pace. |
| Philadelphia Growing +0.5 Outlook ▲ Increased; growth easing. |
| Cleveland Flat Outlook ▶ Expanding; signs of moderation. |
| Richmond Flat Outlook ▶ Grew more slowly. |
| Atlanta Flat Outlook ▶ Mixed. |
| Chicago Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| St. Louis Flat Outlook ▶ Mixed. |
| Minneapolis Growing +0.5 Outlook ▲ Grew moderately. |
| Kansas City Growing +0.5 Outlook ▲ Expanded moderately. |
| Dallas Growing +1.0 Outlook ▲ Strong pace with signs of cooling. |
| San Francisco Growing +0.5 Outlook ▲ Solid expansion, moderating. |
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Where the signal is thin or split Divergences to watch | Energy — Dallas's +2 dominates the weighted Energy score.
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| | Consumer Discretionary — Dallas and Cleveland -1s pull the weighted score below zero.
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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 |