EconomyxAI · Beige Book Sector Monitor July 2008Released July 23, 2008 |
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Conditions index −0.07 avg of 11 sectors, −2 to +2 |
| Outlook index −0.21 sectors with an outlook |
| Districts growing 3/12 per National Summary |
| Positive momentum 7/11 sectors improving |
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This release in brief The read | ■ | Released July 23, 2008, with information collected before July 14, 2008. | | ■ | Activity slowed somewhat: five eastern districts weakened, Chicago was sluggish and Kansas City moderated, while Cleveland and Minneapolis edged up and Dallas grew steadily. | | ■ | Consumer spending was sluggish nearly everywhere despite tax rebates; autos were almost uniformly weak, with San Francisco reporting a 'collapse' in the wholesale market for trucks and SUVs. | | ■ | Manufacturing declined in many districts though exports and energy equipment held up; housing stayed weak, and Boston described commercial real estate sentiment as 'decidedly morose.' | | ■ | All districts described price pressures as elevated or increasing; loan growth was restrained with tighter standards, while energy activity strengthened further. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Information Technology
XLK
▶ Steady | +0.33 |
| Health Care
XLV
▶ Steady | +0.19 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | −0.68 |
| Consumer Discretionary
XLY
▶ Steady | −0.60 |
| Financials
XLF
▶ Steady | −0.60 |
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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 | | +0.87 | Favorable | +1.33 | +1.00 | ▶ +0.19 | | 2 | Information Technology
XLK | | +0.33 | Leaning Favorable | +0.55 | n/a | ▶ +0.36 | | 3 | Health Care
XLV | | +0.19 | Leaning Favorable | +0.44 | n/a | ▶ −0.01 | | 4 | Consumer Staples
XLP | | +0.11 | Neutral | +0.43 | n/a | ▲ +0.25 | | 5 | Materials
XLB | | +0.06 | Neutral | +0.16 | n/a | ▶ +0.02 | | 6 | Communication Services
XLC | | +0.02 | Neutral | +0.05 | n/a | ▶ +0.09 | | 7 | Utilities
XLU | | −0.03 | Neutral | +0.00 | n/a | ▶ +0.00 | | 8 | Industrials
XLI | | −0.43 | Leaning Unfavorable | −0.33 | −0.33 | ▼ −0.29 | | 9 | Financials
XLF | | −0.60 | Unfavorable | −1.02 | −0.50 | ▶ +0.04 | | 10 | Consumer Discretionary
XLY | | −0.60 | Unfavorable | −1.06 | −0.62 | ▶ +0.00 | | 11 | Real Estate
XLRE | | −0.68 | Unfavorable | −1.30 | −0.59 | ▶ −0.21 |
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 |
Five eastern districts weakened; Chicago sluggish; Kansas City moderated; Cleveland and Minneapolis up slightly; Dallas steady. | Labor markets unchanged or slightly weaker; wage pressures modest except skilled and energy workers. | | Inflation Pressure (higher = headwind) | | −1.75 |
All districts described price pressures as elevated or increasing; fuel, metals, food and chemicals up. | Loan growth restrained; most districts tightened further; loan quality deteriorating. | Retail outlook 'subdued' in Atlanta and 'grim' in Dallas; manufacturers expect further weakness. |
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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 | · | +1 | −1 | +1 | · | · | +1 | | FinancialsXLF | −1 | −2 | · | · | · | · | −1 | · | −1 | −1 | −1 | −1 | | Consumer DiscretionaryXLY | −1 | · | −1 | · | −1 | −1 | −1 | −1 | −1 | · | −1 | −2 | | Communication ServicesXLC | · | · | · | · | +1 | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | −1 | −1 | · | −1 | −1 | · | · | −1 | −1 | +1 | · | | Consumer StaplesXLP | · | · | +1 | −1 | +1 | · | · | +1 | · | · | +1 | +1 | | EnergyXLE | · | · | · | +1 | · | · | · | · | · | +2 | +2 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | −1 | −1 | · | −1 | −2 | −1 | −1 | · | · | −1 | −2 | | MaterialsXLB | · | · | · | · | · | · | +1 | · | +1 | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Consumer Discretionary −2 San Francisco Wholesale market for trucks and SUVs has 'collapsed'. Why it matters: Largest Discretionary weight at -2. | Energy +2 Dallas Rising prices pushed drilling sharply higher. Why it matters: Energy tops the index. | Real Estate −2 San Francisco Housing demand exceptionally weak; foreclosures rising. Why it matters: Large weight pulls Real Estate down. | Financials −2 New York Weaker loan demand; standards tightened in all categories. Why it matters: Large Financials weight. | Energy +2 Kansas City Energy activity 'very robust'. Why it matters: Broadens Energy strength. | Real Estate −2 Atlanta Home prices dropped across the board; commercial vacancies rising. Why it matters: Deepens Real Estate. |
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Twelve Fed districts District roundup Boston Contracting −1.0 Slowing; commercial real estate sentiment 'decidedly morose'. |
| New York Contracting −1.0 Further signs of softening; consumer confidence at 15-year low. |
| Philadelphia Contracting −1.0 Outlook ▶ Weakened somewhat; discount stores up. |
| Cleveland Growing +0.5 Increased slightly; commercial builders expanding. |
| Richmond Contracting −1.0 Weakened further; exports growing. |
| Atlanta Contracting −1.0 Outlook ▼ Weakened; outlook subdued. |
| Chicago Contracting −0.5 Sluggish; heavy machinery adding capacity. |
| St. Louis Flat Stable; services expanding. |
| Minneapolis Growing +0.5 Grew slightly; tourism and mining up. |
| Kansas City Contracting −0.5 Outlook ▶ Moderated slightly; energy booming. |
| Dallas Growing +0.5 Steady, moderate growth; retail outlook grim. |
| San Francisco Flat Little or no growth; truck-SUV wholesale 'collapse'. |
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Where the signal is thin or split Divergences to watch | ENERGY vs CONSUMER: record oil supports Energy but crushes autos and trucking.
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| | Consumer Staples — discount stores gained in five districts as consumers traded down.
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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 |