EconomyxAI · Sector Watch July 2011Released July 27, 2011 |
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Conditions index +0.34 avg of 11 sectors, −2 to +2 |
| Outlook index +0.43 sectors with an outlook |
| Districts growing 8/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released July 27, 2011, with information collected on or before July 15, 2011. | | ■ | Activity continued to grow but moderated in many districts; the six Atlantic-seaboard districts reported a slowdown and Dallas slowed to a moderate pace. | | ■ | Consumer spending rose overall with modest non-auto retail gains, while Japanese supply disruptions kept auto inventories lean; summer tourism started strong. | | ■ | Manufacturing expanded with steady or slower growth; residential real estate stayed weak, rental markets improved, and nonresidential markets firmed slightly in six districts. | | ■ | Labor markets remained soft with subdued wages, price pressures moderated somewhat, and contacts worried about the unresolved federal debt ceiling. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Materials
XLB
▲ Turning up | +0.37 |
| Information Technology
XLK
▶ Steady | +0.31 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | +0.02 |
| Consumer Staples
XLP
▶ Steady | +0.03 |
| Financials
XLF
▼ Turning down | +0.07 |
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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 | +1.34 | +0.76 | ▶ +0.02 | | 2 | Materials
XLB | | +0.37 | Leaning Favorable | +0.46 | +0.50 | ▲ +0.10 | | 3 | Information Technology
XLK | | +0.31 | Leaning Favorable | +0.49 | +0.50 | ▶ −0.10 | | 4 | Industrials
XLI | | +0.26 | Leaning Favorable | +0.78 | +0.44 | ▶ −0.24 | | 5 | Communication Services
XLC | | +0.21 | Leaning Favorable | +0.06 | +0.47 | ▶ +0.05 | | 6 | Health Care
XLV | | +0.20 | Leaning Favorable | +0.00 | +0.50 | ▶ +0.01 | | 7 | Utilities
XLU | | +0.19 | Leaning Favorable | +0.00 | +0.50 | ▶ +0.00 | | 8 | Consumer Discretionary
XLY | | +0.14 | Neutral | +0.61 | +0.14 | ▲ +0.17 | | 9 | Financials
XLF | | +0.07 | Neutral | +0.08 | +0.34 | ▼ −0.14 | | 10 | Consumer Staples
XLP | | +0.03 | Neutral | +0.00 | +0.50 | ▶ −0.18 | | 11 | Real Estate
XLRE | | +0.02 | Neutral | −0.08 | +0.08 | ▶ +0.30 |
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 |
Growth continued but moderated; six Atlantic districts slowed. | Modest hiring increases but labor markets remained soft; hiring slowed in New York, Philadelphia, Chicago. | | Inflation Pressure (higher = headwind) | | +0.50 |
Price pressures moderated somewhat as oil and some raw materials fell; food still elevated. | Loan demand more mixed; credit quality steady or improving; standards unchanged at tight levels. | Manufacturing outlook optimistic but capital plans more cautious; debt-ceiling uncertainty. |
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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 | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | · | · | · | +1 | · | +1 | −1 | · | −1 | · | · | | Consumer DiscretionaryXLY | · | +1 | +1 | +1 | · | +1 | +1 | −1 | +1 | +2 | +1 | · | | Communication ServicesXLC | +1 | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | · | · | +1 | · | +1 | +1 | · | +1 | +2 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | +1 | +1 | +1 | +2 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | −1 | · | · | · | · | · | −1 | +1 | −1 | +1 | · | | MaterialsXLB | · | · | · | · | · | · | +1 | · | +1 | +1 | · | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy +2 Dallas Domestic drilling strong; refining margins remain very strong. Why it matters: Dallas carries 45% of Energy weight. | Consumer Discretionary +2 Kansas City Spending rose solidly, especially at restaurants and auto dealers. Why it matters: Strongest Discretionary read. | Industrials +2 Kansas City Manufacturing rebounded; high-tech and transportation expanded. Why it matters: Offsets pauses in the Northeast. | Industrials 0 New York, Philadelphia, Richmond Manufacturing paused, leveled off or stalled in July. Why it matters: Removes Atlantic-seaboard support from Industrials. | Information Technology +1 San Francisco Demand for semiconductors and technology products lifted growth. Why it matters: SF holds 47% of IT weight. | Consumer Discretionary −1 St. Louis General retailers report sales have slowed. Why it matters: Lone negative Discretionary district. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▶ Continues to increase; results more mixed. |
| New York Flat Outlook ▶ Pace slowed somewhat. |
| Philadelphia Flat Outlook ▲ Growing at a very slow rate. |
| Cleveland Growing +0.5 Outlook ▲ Expanded at a modest but slower pace. |
| Richmond Flat Outlook ▶ Unchanged or slightly improved. |
| Atlanta Flat Outlook ▲ Little changed. |
| Chicago Growing +0.5 Outlook ▲ Continued to expand slowly. |
| St. Louis Growing +0.5 Outlook ▲ Increased at a modest pace. |
| Minneapolis Growing +0.5 Outlook ▲ Grew modestly despite disruptions. |
| Kansas City Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Dallas Growing +1.0 Outlook ▶ Expanded at a moderate pace. |
| San Francisco Growing +0.5 Outlook ▲ Grew modestly. |
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Where the signal is thin or split Divergences to watch | Consumer Discretionary — Kansas City's +2 and broad +1s are offset by flat reads in Boston, Richmond and San Francisco (26% weight).
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| | Industrials — pauses along the Atlantic seaboard pull the unweighted average below Q2 levels.
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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 |