EconomyxAI · Sector Watch June 1998Released June 17, 1998 · Data through June 8 |
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Conditions index +0.25 avg of 11 sectors, −2 to +2 |
| Outlook index −0.13 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 5/11 sectors improving |
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This release in brief The read | ■ | The economy 'continues its excellent performance', growing in every district, fastest in the Northeast, Midwest and West Coast. | | ■ | Consumer spending was liberal, with home furnishings, tourism and incentive-driven car sales strong; Atlanta was the soft spot. | | ■ | Construction was an engine of growth, with vigorous home building and New York and San Francisco office rents rising about 25%. | | ■ | Manufacturing grew strongly in the Northeast and Midwest but slowed in an arc from Dallas through Atlanta and Richmond; high-tech electronics and computer components weakened on Asia. | | ■ | Oil and gas drilling was slack everywhere it was reported, labor markets were tight with targeted pay increases, and goods prices were largely stable. |
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Sector prospects Where the 3–12 month view points Strongest prospects Real Estate
XLRE
▶ Steady | +0.61 |
| Consumer Discretionary
XLY
▶ Steady | +0.41 |
| Financials
XLF
▶ Steady | +0.25 |
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| Weakest prospects Energy
XLE
▼ Weakening | −0.62 |
| Information Technology
XLK
▼ Weakening | −0.61 |
| Materials
XLB
▼ Turning down | −0.30 |
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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 | | +0.61 | Favorable | +1.26 | +0.48 | ▶ −0.15 | | 2 | Consumer Discretionary
XLY | | +0.41 | Leaning Favorable | +0.88 | +0.42 | ▶ +0.04 | | 3 | Financials
XLF | | +0.25 | Leaning Favorable | +0.81 | n/a | ▶ +0.01 | | 4 | Health Care
XLV | | +0.22 | Leaning Favorable | +0.19 | n/a | ▶ +0.17 | | 5 | Communication Services
XLC | | +0.21 | Leaning Favorable | +0.40 | n/a | ▶ −0.01 | | 6 | Industrials
XLI | | +0.18 | Leaning Favorable | +0.61 | +0.20 | ▼ −0.28 | | 7 | Consumer Staples
XLP | | +0.06 | Neutral | +0.07 | n/a | ▶ +0.07 | | 8 | Utilities
XLU | | +0.04 | Neutral | +0.00 | n/a | ▶ +0.04 | | 9 | Materials
XLB | | −0.30 | Leaning Unfavorable | −0.18 | −0.32 | ▼ −0.51 | | 10 | Information Technology
XLK | | −0.61 | Unfavorable | −0.72 | −0.53 | ▼ −0.71 | | 11 | Energy
XLE | | −0.62 | Unfavorable | −0.57 | −1.00 | ▼ −0.69 |
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 | | +1.25 |
Growth continued in every district, quite strong in the Northeast, much of the Midwest and the West Coast, more modest in the Southeast and Dallas. | Employment high and labor markets tight in most areas; no widespread general wage increases, but targeted and nonwage compensation increases were frequent and Chicago's unemployment fell to 3.3%. | | Inflation Pressure (higher = headwind) | | +0.00 |
Goods prices were largely stable and mostly lower in Dallas, with low commodity and energy prices holding down the general level; some service costs (health care, trucking, contract services) rose. | Banks generally in good shape with strong loan demand in most districts, but Minneapolis loan growth slowed as banks tightened standards, and Philadelphia volume was level. | Retail and tourism outlooks were upbeat for the summer and San Francisco expects solid growth, but Boston contacts are uneasy about how long the expansion can last, Atlanta manufacturers expect softening, and drillers see no improvement until oil prices rise. |
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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 | · | +1 | · | −1 | −1 | | Health CareXLV | +1 | · | · | · | +1 | · | · | · | +1 | · | · | · | | FinancialsXLF | · | +1 | · | +1 | +1 | +1 | +1 | +1 | · | · | +1 | +1 | | Consumer DiscretionaryXLY | +1 | +1 | +1 | +1 | +1 | · | +1 | +1 | +1 | +1 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | +1 | +1 | +1 | −1 | · | +2 | +1 | +1 | +1 | · | · | | Consumer StaplesXLP | · | · | · | · | +1 | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | −1 | · | · | −1 | · | −1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +2 | +1 | +1 | +1 | +1 | +2 | +2 | +2 | +1 | +1 | +1 | | MaterialsXLB | · | · | · | · | −1 | · | +1 | · | · | · | · | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Information Technology −1 San Francisco Computer component supply outstripping demand; high-tech layoffs in the Bay Area. Why it matters: San Francisco is 47% of IT; turning -1 drives the largest move this release. | Energy −1 Dallas Oil service business slowed; drilling decline spread to natural gas. Why it matters: Dallas carries 45% of Energy; first negative Dallas read in this series. | Industrials +2 Chicago Manufacturing 'very high' and strength 'nearly universal'. Why it matters: Chicago's +2 offsets Richmond's -1 and San Francisco's 0. | Real Estate +2 New York, Chicago, St. Louis, Minneapolis Manhattan rents rising at 25% annual rate; 'house sale boom continues into fifth month'. Why it matters: Four +2s keep Real Estate the top-ranked sector. | Information Technology −1 Chicago, Boston, Richmond, Dallas High-tech production, orders and prices down; microelectronics demand softened. Why it matters: Broad IT weakness, not just San Francisco. | Industrials −1 Richmond Manufacturing stagnated as shipments fell. Why it matters: Marks the weaker southeastern arc. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Economy continues to expand. |
| New York Growing +1.0 Pace of growth has picked up. |
| Philadelphia Growing +1.0 Outlook ▲ Continued growth in most sectors. |
| Cleveland Growing +1.0 Continues to expand amid modest inflation. |
| Richmond Growing +1.0 Outlook ▲ Grew moderately despite manufacturing pullback. |
| Atlanta Growing +1.0 Outlook ▲ Pushing ahead at a stable pace; outlook upbeat. |
| Chicago Growing +1.0 Expansion picked up some momentum. |
| St. Louis Growing +2.0 Outlook ▲ Conditions remain exceedingly good. |
| Minneapolis Growing +1.0 Outlook ▲ Moderate to strong growth continues. |
| Kansas City Growing +1.0 Outlook ▲ Maintained strong momentum; no signs of slowdown. |
| Dallas Growing +1.0 Outlook ▶ Slowed slightly to a modest rate of growth. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a solid clip. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco (47%) turns -1, so weighted IT drops sharply negative even though only five of twelve districts are negative.
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| | Energy — Dallas (45%) -1 makes weighted Energy clearly negative; Kansas City's marginal improvement scored 0.
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| | Industrials — San Francisco 0 and Richmond -1 reduce the weighted score below the unweighted count of eight positive districts.
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| | Consumer Discretionary — eleven positive districts; only Atlanta at 0.
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| | UTILITIES and COMMUNICATION SERVICES: little or no coverage.
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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 |