EconomyxAI · Sector Watch July 2018Released July 18, 2018 |
| |
Conditions index +0.51 avg of 11 sectors, −2 to +2 |
| Outlook index +0.26 sectors with an outlook |
| Districts growing 11/12 per National Summary |
| Positive momentum 8/11 sectors improving |
|
|
This release in brief The read | ■ | Released July 18, 2018, with information collected on or before July 9, 2018. | | ■ | Ten districts reported modest or moderate growth; Dallas was strong on energy and St. Louis only slight. | | ■ | Manufacturers in all districts expressed concern about tariffs, citing higher prices and supply disruptions; consumer spending rose everywhere, strongest in Dallas and Richmond. | | ■ | Labor markets tight and constraining growth; trucking capacity short; existing home sales slow; commercial real estate largely unchanged; input prices rose and margins shrank. |
|
Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▲ Turning up | +0.57 |
| Real Estate
XLRE
▶ Steady | +0.52 |
| Consumer Discretionary
XLY
▲ Improving | +0.46 |
|
|
| Weakest prospects Consumer Staples
XLP
▶ Steady | −0.01 |
| Health Care
XLV
▶ Steady | +0.00 |
| Communication Services
XLC
▶ Steady | +0.02 |
|
|
|
|
All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
|---|
| 1 | Energy
XLE | | +0.57 | Favorable | +1.12 | +0.45 | ▲ +0.26 | | 2 | Real Estate
XLRE | | +0.52 | Favorable | +0.95 | +0.48 | ▶ +0.20 | | 3 | Consumer Discretionary
XLY | | +0.46 | Leaning Favorable | +0.85 | +0.50 | ▲ +0.53 | | 4 | Industrials
XLI | | +0.44 | Leaning Favorable | +1.32 | +0.43 | ▶ +0.18 | | 5 | Financials
XLF | | +0.38 | Leaning Favorable | +0.79 | +0.50 | ▶ +0.15 | | 6 | Materials
XLB | | +0.22 | Leaning Favorable | +0.50 | +0.00 | ▶ +0.10 | | 7 | Information Technology
XLK | | +0.11 | Neutral | +0.07 | +0.50 | ▼ −0.54 | | 8 | Utilities
XLU | | +0.03 | Neutral | +0.00 | +0.00 | ▶ +0.10 | | 9 | Communication Services
XLC | | +0.02 | Neutral | +0.00 | +0.00 | ▶ +0.03 | | 10 | Health Care
XLV | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Consumer Staples
XLP | | −0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 |
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 |
Ten districts modest or moderate; Dallas strong, St. Louis slight. | Employment up modestly to moderately; tight labor constraining growth. | | Inflation Pressure (higher = headwind) | | +0.75 |
Prices up modestly to moderately with upticks; fuel, freight, metals and construction materials rising. | Loan demand continued to grow; St. Louis C&I robust. | Outlooks positive but manufacturers in all districts concerned about tariffs. |
|
Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
|---|
| Information TechnologyXLK | +1 | · | · | · | · | · | · | · | · | · | · | · | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | +1 | +1 | · | +1 | · | +1 | +2 | · | +1 | +1 | +1 | | Consumer DiscretionaryXLY | +1 | +1 | +1 | +1 | +2 | +1 | +1 | · | · | +1 | +2 | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +2 | +1 | +2 | +2 | +1 | +1 | +1 | +2 | +2 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | +1 | +1 | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | · | −1 | +1 | +1 | +1 | +1 | · | · | +1 | +1 | +2 | | MaterialsXLB | · | · | +1 | · | · | · | +1 | · | · | · | +1 | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
|
Top highlights What moved the scores Energy +2 Dallas Energy sector activity expanded strongly. Why it matters: Dallas carries the largest Energy weight. | Industrials +2 New York, Cleveland, Richmond, Minneapolis, Kansas City Manufacturing brisk, strong or robust. Why it matters: Five strong Industrials reads. | Consumer Discretionary +2 Dallas, Richmond Retail and auto sales strengthened. Why it matters: Strong Discretionary reads. | Real Estate +2 San Francisco Residential construction strong. Why it matters: SF carries large Real Estate weight. | Financials +2 St. Louis Robust C&I loan growth. Why it matters: Strong Financials read. | Consumer Discretionary +1 broad−based Broad-based Consumer spending up in all districts. Why it matters: Discretionary broadly positive. |
|
Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| New York Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Philadelphia Growing +0.5 Outlook ▲ Continued at a modest pace. |
| Cleveland Growing +1.0 Outlook ▲ Grew moderately. |
| Richmond Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Atlanta Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| Chicago Growing +0.5 Outlook ▲ Slowed to a modest pace. |
| St. Louis Flat Outlook ▶ Improved slightly. |
| Minneapolis Growing +1.0 Outlook ▲ Grew moderately overall. |
| Kansas City Growing +1.0 Outlook ▲ Increased at a moderate pace. |
| Dallas Growing +1.5 Outlook ▲ Continued at a solid pace. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
|
|
Where the signal is thin or split Divergences to watch | Industrials — Five +2 reads drive weighted Industrials well above +1 despite tariff concerns.
|
| | Energy — Dallas +2 with its large Energy weight drives the weighted score far above the unweighted average.
|
|
|
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 |