EconomyxAI · Sector Watch June 1999Released June 16, 1999 · Data through June 7 |
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Conditions index +0.51 avg of 11 sectors, −2 to +2 |
| Outlook index +0.50 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 8/11 sectors improving |
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This release in brief The read | ■ | The economy remained strong with gains in activity widespread. | | ■ | Retail showed little sign of slowing, with home furnishings and motor vehicles selling particularly well; Chicago light vehicle sales were the highest since December 1986. | | ■ | Manufacturing kept improving from the sluggish conditions of the past year and a half, led by electronics, machinery, heavy trucks and construction equipment. | | ■ | Construction grew briskly nationwide, but labor and sheetrock shortages raised building costs. | | ■ | Labor markets were extremely tight with more reports of wage pressure, while energy activity was slow to respond to higher oil prices despite high expectations of recovery. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Discretionary
XLY
▲ Turning up | +0.79 |
| Real Estate
XLRE
▶ Steady | +0.47 |
| Energy
XLE
▲ Improving | +0.42 |
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| Weakest prospects Financials
XLF
▼ Turning down | −0.04 |
| Consumer Staples
XLP
▶ Steady | +0.11 |
| Utilities
XLU
▶ Steady | +0.21 |
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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 | Consumer Discretionary
XLY | | +0.79 | Favorable | +1.42 | +0.75 | ▲ +0.18 | | 2 | Real Estate
XLRE | | +0.47 | Leaning Favorable | +1.36 | −0.12 | ▶ +0.05 | | 3 | Energy
XLE | | +0.42 | Leaning Favorable | −0.02 | +0.50 | ▲ +1.03 | | 4 | Materials
XLB | | +0.41 | Leaning Favorable | +0.20 | n/a | ▶ +0.26 | | 5 | Communication Services
XLC | | +0.32 | Leaning Favorable | +0.47 | n/a | ▶ +0.07 | | 6 | Health Care
XLV | | +0.32 | Leaning Favorable | +0.29 | n/a | ▶ +0.10 | | 7 | Industrials
XLI | | +0.31 | Leaning Favorable | +0.63 | +0.40 | ▶ −0.03 | | 8 | Information Technology
XLK | | +0.30 | Leaning Favorable | +0.69 | +1.00 | ▶ +0.08 | | 9 | Utilities
XLU | | +0.21 | Leaning Favorable | +0.21 | n/a | ▶ +0.25 | | 10 | Consumer Staples
XLP | | +0.11 | Neutral | +0.12 | n/a | ▶ −0.04 | | 11 | Financials
XLF | | −0.04 | Neutral | +0.25 | +0.50 | ▼ −0.51 |
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 |
The economy remained strong with widespread gains; retail showed little sign of slowing and manufacturing improved in most areas, though New York and Kansas City slowed somewhat. | Labor markets extremely tight with no sign of easing; Richmond, Chicago and St. Louis said supply constraints were hampering employment growth and reported broad wage pressure. | | Inflation Pressure (higher = headwind) | | +0.50 |
Prices generally subdued, but sheetrock surged, commodity and metals prices turned up, Dallas saw more increases than declines and consumer resistance to price increases softened in Chicago. | Loan demand strong in most districts; refinancing slowed on higher mortgage rates and commercial demand weakened in New York and Atlanta. | San Francisco contacts showed substantially greater optimism, Philadelphia businesses had positive outlooks and builders remained optimistic, though Boston expects slower second-half growth and Atlanta's housing outlook weakened. |
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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 | | Health CareXLV | +1 | · | · | · | · | · | · | · | · | · | · | +1 | | FinancialsXLF | · | −1 | +1 | · | +1 | +1 | +1 | · | · | +1 | +1 | +1 | | Consumer DiscretionaryXLY | +2 | +1 | +1 | +2 | +1 | +1 | +2 | +1 | +2 | · | +1 | +2 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | +1 | +1 | | IndustrialsXLI | · | −1 | +1 | +1 | +1 | · | +2 | +1 | +1 | +2 | · | · | | Consumer StaplesXLP | · | · | · | · | +1 | · | · | +1 | · | · | · | · | | EnergyXLE | · | · | · | · | · | −1 | · | · | −1 | +1 | · | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | +1 | | Real EstateXLRE | +1 | +1 | +2 | +1 | +2 | · | +2 | +2 | +2 | +1 | +1 | +2 | | MaterialsXLB | · | · | · | · | · | −1 | · | · | −1 | · | +1 | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy 0 Dallas Activity has not increased with higher oil prices, but optimism about the second half is rising. Why it matters: Dallas carries the largest Energy weight; moving from -1 to 0 removes most of the sector's drag. | Consumer Discretionary +2 broad−based Boston, Cleveland, Chicago, Minneapolis, San Francisco Light vehicle sales highest since December 1986; all Boston retail contacts report strong growth. Why it matters: Five +2s including heavy-weight San Francisco and Chicago push Discretionary to the top. | Real Estate +2 broad−based Philadelphia, Richmond, Chicago, St. Louis, Minneapolis, San Francisco Homes selling before they are listed; strong demand spurring new San Francisco offices. Why it matters: Six +2 reads keep Real Estate at the top. | Industrials +2 Chicago, Kansas City Automakers running near capacity; Kansas City factories show marked improvement. Why it matters: Two +2s lift Industrials despite New York's -1. | Information Technology +1 San Francisco, Dallas, Boston Semiconductor sales rising on world demand; high-tech firms expanding work forces. Why it matters: San Francisco carries about 47% of IT weight. | Financials −1 New York Overall loan demand dipped in the past two months. Why it matters: New York is about 28% of Financials; its -1 offsets most of the +1s elsewhere. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Economy continues to expand. |
| New York Growing +1.0 Expanding, at a somewhat slower pace. |
| Philadelphia Growing +1.0 Outlook ▲ Business activity continued to increase. |
| Cleveland Growing +1.0 Still quite strong. |
| Richmond Growing +2.0 Advanced at a rapid clip. |
| Atlanta Growing +1.0 Outlook ▲ Moderate growth continues. |
| Chicago Growing +1.0 Expanded at a modest pace. |
| St. Louis Growing +2.0 Continues to exhibit strong growth. |
| Minneapolis Growing +1.0 Economy continues to expand. |
| Kansas City Growing +1.0 Outlook ▲ Solid but slowed from rapid growth. |
| Dallas Growing +1.0 Outlook ▲ Expanded at roughly the same pace. |
| San Francisco Growing +2.0 Outlook ▲ Robust economic conditions. |
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Where the signal is thin or split Divergences to watch | Energy — no -2 reads for the first time since early 1998; Kansas City turns +1 while Dallas reaches 0, so weighted Energy moves near neutral.
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| | Consumer Discretionary — five +2 reads make it the strongest conditions sector alongside Real Estate.
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| | Financials — New York's -1 pulls weighted Financials below the unweighted average because of its heavy weight.
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| | Materials — Dallas and San Francisco +1 offset Atlanta and Minneapolis -1.
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| | Utilities — only San Francisco's +1 on strong utility services demand.
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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 |