EconomyxAI · Sector Watch July 2016Released July 13, 2016 |
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Conditions index +0.12 avg of 11 sectors, −2 to +2 |
| Outlook index +0.30 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 13, 2016, with information collected on or before July 1, 2016. | | ■ | Activity continued to expand at a modest pace across most regions; Cleveland steady, Minneapolis moderate. | | ■ | Consumer spending positive with some signs of softening; manufacturing mixed but generally improved with rebounds in New York, Philadelphia, St. Louis and Kansas City. | | ■ | Real estate strengthened, loan demand rose, agriculture improving, and energy remained weak though outlooks improved. |
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Sector prospects Where the 3–12 month view points Strongest prospects Real Estate
XLRE
▶ Steady | +0.55 |
| Financials
XLF
▶ Steady | +0.28 |
| Industrials
XLI
▶ Steady | +0.25 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | −0.10 |
| Communication Services
XLC
▶ Steady | −0.05 |
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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 | Real Estate
XLRE | | +0.55 | Favorable | +1.11 | +0.67 | ▶ −0.20 | | 2 | Financials
XLF | | +0.28 | Leaning Favorable | +0.64 | +0.47 | ▶ −0.09 | | 3 | Industrials
XLI | | +0.25 | Leaning Favorable | +0.33 | +0.44 | ▶ −0.09 | | 4 | Health Care
XLV | | +0.24 | Leaning Favorable | +0.20 | +0.50 | ▶ −0.06 | | 5 | Consumer Discretionary
XLY | | +0.13 | Neutral | +0.06 | +0.50 | ▶ −0.35 | | 6 | Information Technology
XLK | | +0.09 | Neutral | −0.01 | +0.50 | ▼ −0.59 | | 7 | Materials
XLB | | +0.06 | Neutral | −0.05 | +0.00 | ▶ +0.11 | | 8 | Utilities
XLU | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Energy
XLE | | −0.03 | Neutral | −0.63 | +0.28 | ▶ +0.33 | | 10 | Communication Services
XLC | | −0.05 | Neutral | −0.15 | +0.00 | ▶ −0.15 | | 11 | Consumer Staples
XLP | | −0.10 | Neutral | −0.22 | +0.00 | ▶ −0.18 |
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 |
Modest pace across most regions; Minneapolis moderate, Cleveland steady. | Employment grew modestly; strong demand for skilled labor. | | Inflation Pressure (higher = headwind) | | +0.25 |
Price pressures slight; input prices rising. | Loan demand increased; asset quality improved. | Outlook generally positive across retail, manufacturing and real estate. |
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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 | · | | FinancialsXLF | · | +1 | +1 | · | +1 | +1 | · | +2 | · | +1 | −1 | +1 | | Consumer DiscretionaryXLY | · | · | −1 | −1 | −1 | · | +1 | +1 | +1 | +1 | · | · | | Communication ServicesXLC | · | −1 | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | +1 | +1 | · | −1 | +1 | +1 | +1 | +1 | +1 | −1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | −1 | | EnergyXLE | · | · | · | · | · | −1 | · | −1 | · | −1 | −1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | +1 | +2 | +1 | +1 | +1 | +2 | +1 | +2 | +1 | +1 | | MaterialsXLB | · | · | −1 | +1 | · | · | +1 | −2 | +1 | · | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Information Technology 0 San Francisco Demand for semiconductors weak; slower IT sales growth. Why it matters: SF IT weight 47% now neutral. | Real Estate +2 Cleveland, St. Louis, Kansas City Strong growth in housing starts and home sales. Why it matters: RE remains strongest. | Financials +2 St. Louis C&I loans up 27 percent. Why it matters: Financials positive. | Materials −2 St. Louis Coal production down nearly 30 percent. Why it matters: Materials offset. | Consumer Discretionary −1 Philadelphia, Cleveland, Richmond Retail sales declined. Why it matters: CD softening. | Industrials +1 New York, Philadelphia, St. Louis, Kansas City Manufacturing rebounded. Why it matters: Industrials improved. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Modest gains on balance. |
| New York Growing +0.5 Outlook ▲ Picked up, growing modestly. |
| Philadelphia Growing +0.5 Outlook ▶ Continued at a modest pace. |
| Cleveland Flat Outlook ▶ Steady level of activity. |
| Richmond Growing +0.5 Outlook ▲ Expanded modestly. |
| Atlanta Growing +0.2 Outlook ▲ Expanded slightly. |
| Chicago Growing +0.5 Outlook ▲ Continued at a modest pace. |
| St. Louis Growing +0.5 Outlook ▲ Improve at a modest pace. |
| Minneapolis Growing +1.0 Outlook ▲ Increased at a moderate pace. |
| Kansas City Growing +0.5 Outlook ▲ Increased modestly. |
| Dallas Growing +0.2 Outlook ▲ Expanded slightly. |
| San Francisco Growing +1.0 Outlook ▲ Moderate pace. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco slips to 0, sharply reducing the weighted IT score.
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| | Real Estate — Broad positive with three +2 reads keeps RE the strongest sector.
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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 |