EconomyxAI · Sector Watch June 2001Released June 13, 2001 |
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Conditions index −0.22 avg of 11 sectors, −2 to +2 |
| Outlook index −0.00 sectors with an outlook |
| Districts growing 2/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | Most districts reported activity little changed or decelerating in April and May. | | ■ | Manufacturing decreased or slowed in every district, with telecom weakness in seven; Richmond shipments and orders tumbled. | | ■ | Retail sales and tourism were slow to flat; Manhattan hotel occupancy fell 10 points and room rates had their steepest drop in eight years. | | ■ | Commercial real estate softened with higher vacancies in nine districts, while home buying stayed generally active. | | ■ | Energy exploration was the one bright spot, with Kansas City rigs at an eleven-year high; credit quality slipped in many districts. |
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Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▲ Improving | +1.00 |
| Health Care
XLV
▶ Steady | +0.09 |
| Utilities
XLU
▶ Steady | +0.06 |
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| Weakest prospects Information Technology
XLK
▶ Steady | −0.87 |
| Industrials
XLI
▶ Steady | −0.39 |
| Consumer Discretionary
XLY
▶ Steady | −0.36 |
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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 | | +1.00 | Favorable | +1.42 | n/a | ▲ +0.76 | | 2 | Health Care
XLV | | +0.09 | Neutral | +0.20 | n/a | ▶ +0.01 | | 3 | Utilities
XLU | | +0.06 | Neutral | +0.00 | n/a | ▶ −0.03 | | 4 | Financials
XLF | | +0.03 | Neutral | +0.01 | +0.30 | ▶ +0.17 | | 5 | Consumer Staples
XLP | | −0.12 | Neutral | +0.00 | n/a | ▶ −0.14 | | 6 | Real Estate
XLRE | | −0.23 | Leaning Unfavorable | −0.30 | −0.16 | ▶ −0.42 | | 7 | Materials
XLB | | −0.31 | Leaning Unfavorable | −0.64 | −0.50 | ▲ +0.10 | | 8 | Communication Services
XLC | | −0.33 | Leaning Unfavorable | −0.40 | n/a | ▼ −0.34 | | 9 | Consumer Discretionary
XLY | | −0.36 | Leaning Unfavorable | −0.49 | −0.16 | ▶ −0.30 | | 10 | Industrials
XLI | | −0.39 | Leaning Unfavorable | −0.95 | +0.02 | ▶ −0.24 | | 11 | Information Technology
XLK | | −0.87 | Unfavorable | −1.25 | +0.50 | ▶ −0.43 |
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 |
Most districts reported activity little changed or decelerating; manufacturing decreased or slowed in all districts and commercial real estate softened. | Labor markets eased in all districts; initial claims up 55-60% from a year earlier in Chicago and Minneapolis; IT workers struggling to find jobs. | | Inflation Pressure (higher = headwind) | | +0.00 |
Non-energy prices generally stable with heavy retail discounting and auto incentives; significant increases in energy, health care and lumber. | Credit quality slipped in six districts; commercial loan demand down in six; refinancing easing as fixed mortgage rates drifted up. | Boston contacts turned decidedly pessimistic and Dallas expects sluggish activity all year, but Chicago manufacturers think the worst is over and Philadelphia expects growth to resume in the second half. |
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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 | −2 | | Health CareXLV | +1 | +1 | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | +1 | +1 | · | · | · | −1 | −1 | · | +1 | −1 | −1 | | Consumer DiscretionaryXLY | −1 | −1 | · | +1 | · | · | −1 | · | · | −1 | · | −1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | −1 | | IndustrialsXLI | −1 | −1 | −1 | −1 | −2 | −1 | −1 | −1 | −1 | −1 | · | −1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | +1 | +2 | +2 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | +1 | −1 | · | · | · | · | +1 | · | · | −1 | −1 | | MaterialsXLB | · | · | −1 | −1 | · | −1 | −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 rig count continues to climb, reaching 1262 rigs in May. Why it matters: Dallas carries 45% of Energy; a +2 lifts Energy well clear of other sectors. | Information Technology −2 San Francisco A growing portion of semiconductor inventory will be outdated before it can be sold. Why it matters: San Francisco's 47% weight drives IT to the bottom. | Industrials −1 broad−based Eleven districts Manufacturing activity decreased or slowed in May for all the districts. Why it matters: Broad weakness keeps Industrials deeply negative. | Industrials −2 Richmond Manufacturing shipments and new orders tumbled. Why it matters: The only -2 in Industrials this release. | Energy +2 Kansas City Rig count reached a new 11-year high. Why it matters: Second +2 confirms broad Energy strength. | Communication Services −1 San Francisco Weaker demand for cable, Internet connections and wireless phone service. Why it matters: San Francisco is 40% of Communication Services. |
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Twelve Fed districts District roundup Boston Contracting −1.0 Outlook ▼ Decidedly more pessimistic tone. |
| New York Growing +1.0 Level remains high; growth pausing. |
| Philadelphia Flat Outlook ▲ Continued to be soft. |
| Cleveland Contracting −1.0 Outlook ▶ Changed little; remained weak. |
| Richmond Growing +1.0 Outlook ▼ Grew slightly. |
| Atlanta Flat Outlook ▶ Remained sluggish. |
| Chicago Flat Outlook ▲ Slowed further, worst may be over. |
| St. Louis Flat Outlook ▼ Sluggish growth. |
| Minneapolis Contracting −1.0 Outlook ▼ Economy is in the doldrums. |
| Kansas City Flat Outlook ▶ Remained somewhat weak. |
| Dallas Flat Outlook ▶ Continued to decelerate. |
| San Francisco Flat Deceleration in economic growth. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco -2 with 47% weight keeps weighted IT the weakest sector.
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| | Energy — two +2 reads (Kansas City, Dallas) give Energy its strongest reading of 2001.
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| | Industrials — eleven of twelve districts negative, including Richmond at -2.
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| | Communication Services — first telecom services read from San Francisco, whose 40% weight makes the sector clearly negative.
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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 |