EconomyxAI · Beige Book Sector Monitor July 2007Released July 25, 2007 |
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Conditions index +0.12 avg of 11 sectors, −2 to +2 |
| Outlook index +0.09 sectors with an outlook |
| Districts growing 10/12 per National Summary |
| Positive momentum 1/11 sectors improving |
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This release in brief The read | ■ | Released July 25, 2007, with information collected before mid-July 2007 (date not printed in the PDF). | | ■ | Activity continued to expand in June and early July; five districts described growth as moderate and two as modest, Philadelphia improved, Kansas City moderated, Dallas stayed strong but decelerated, and Boston and Atlanta were mixed. | | ■ | Consumer spending rose modestly but sales were flat or below expectations in four districts, with high gas and food prices weighing; vehicle sales were lackluster while tourism was mostly positive. | | ■ | Manufacturing kept expanding on fabricated metals, aerospace, defense and exports, residential real estate kept declining, and commercial real estate was more active with soaring New York rents. | | ■ | Employment increased further with skill shortages in seven districts; household lending declined and credit quality deteriorated marginally, while input costs for petroleum products stayed high. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Health Care
XLV
▶ Steady | +0.35 |
| Industrials
XLI
▶ Steady | +0.23 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | −0.21 |
| Financials
XLF
▼ Turning down | −0.10 |
| Materials
XLB
▶ Steady | −0.10 |
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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 | | +0.45 | Leaning Favorable | +0.67 | +0.50 | ▶ +0.00 | | 2 | Health Care
XLV | | +0.35 | Leaning Favorable | +0.46 | +0.50 | ▶ +0.09 | | 3 | Industrials
XLI | | +0.23 | Leaning Favorable | +0.33 | +0.50 | ▶ −0.04 | | 4 | Communication Services
XLC | | +0.02 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 5 | Utilities
XLU | | −0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 6 | Information Technology
XLK | | −0.04 | Neutral | +0.00 | +0.00 | ▼ −0.27 | | 7 | Consumer Staples
XLP | | −0.05 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 8 | Consumer Discretionary
XLY | | −0.06 | Neutral | +0.14 | +0.00 | ▶ −0.46 | | 9 | Materials
XLB | | −0.10 | Neutral | −0.24 | +0.00 | ▶ −0.28 | | 10 | Financials
XLF | | −0.10 | Neutral | −0.01 | +0.00 | ▼ −0.34 | | 11 | Real Estate
XLRE | | −0.21 | Leaning Unfavorable | −0.06 | −0.50 | ▶ −0.07 |
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 |
Expansion continued; most districts moderate or modest; Dallas strong but decelerating; Boston and Atlanta mixed. | Employment increased in most regions; Richmond hiring intensified; skill shortages in seven districts; Kansas City slower. | | Inflation Pressure (higher = headwind) | | −0.50 |
Ongoing input cost pressure for petroleum-related inputs; retail prices up moderately; lumber and cement declining. | Household lending declined with tighter mortgage underwriting and higher rates; household credit quality deteriorated marginally; C&I up modestly. | Manufacturers expect modest gains and New York broad optimism; housing outlooks revised down in Dallas and Cleveland. |
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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 | · | · | · | · | · | · | · | · | · | · | · | · | | Health CareXLV | · | · | · | +1 | +1 | · | +1 | +1 | · | · | · | +1 | | FinancialsXLF | · | −1 | · | +1 | −1 | +1 | · | +1 | · | · | · | +1 | | Consumer DiscretionaryXLY | · | +1 | +1 | · | · | · | · | +1 | +1 | +1 | −1 | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | +1 | +1 | +1 | +1 | · | · | +1 | +1 | −1 | −1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | +1 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | +1 | · | · | · | −1 | −1 | · | · | · | · | · | | MaterialsXLB | · | · | · | · | · | −1 | · | · | · | · | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Financials −1 New York Weaker demand in all credit categories; standards tightened. Why it matters: Largest Financials weight. | Industrials +1 Richmond, Philadelphia Manufacturing rebounded; shipments largest in six months. Why it matters: Industrials support. | Industrials −1 Kansas City, Dallas Manufacturing slowed; construction-related demand soft. Why it matters: Industrials drag. | Real Estate −1 Atlanta, Chicago Home sales below year ago; foreclosures rising. Why it matters: Real Estate drag. | Real Estate +1 New York Manhattan office rents up over 30%. Why it matters: Real Estate support. | Materials −1 Atlanta, Dallas Concrete and stone sales down sharply. Why it matters: Materials drag. |
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Twelve Fed districts District roundup Boston Flat Outlook ▶ Varied reports; mixed results. |
| New York Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| Philadelphia Growing +1.0 Outlook ▲ Economic conditions improved. |
| Cleveland Growing +0.5 Outlook ▲ Grew at a modest pace. |
| Richmond Growing +0.5 Outlook ▲ Advanced at a moderate pace. |
| Atlanta Flat Outlook ▶ Mixed picture. |
| Chicago Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| St. Louis Growing +0.5 Outlook ▲ Expanded moderately. |
| Minneapolis Growing +0.5 Outlook ▲ Grew moderately. |
| Kansas City Growing +0.5 Outlook ▲ Grew at a moderating pace. |
| Dallas Growing +0.5 Outlook ▲ Moderately strong but decelerated slightly. |
| San Francisco Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
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Where the signal is thin or split Divergences to watch | Financials — New York's -1 offsets four +1s, keeping weighted Financials near neutral as subprime stress builds.
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| | Industrials — Richmond's rebound broadens Industrials to +1 in eight districts.
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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 |