EconomyxAI · Sector Watch June 2004Released June 16, 2004 |
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Conditions index +0.73 avg of 11 sectors, −2 to +2 |
| Outlook index +0.31 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 7/11 sectors improving |
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This release in brief The read | ■ | Released June 16, 2004, with information collected before June 7, 2004. | | ■ | Activity continued to expand across the nation in April and May, with manufacturing up in every district and services demand rising in most. | | ■ | Retail sales were even or higher in most districts, strongest in New York, Philadelphia, Atlanta and San Francisco; some retailers worried that rising energy prices would hurt sales. | | ■ | Housing stayed robust, with 'fence-sitters' buying ahead of higher mortgage rates; commercial real estate was mostly slack but improving in a few districts. | | ■ | Hiring picked up in most districts; consumer price increases were modest while energy, building materials and steel input prices rose and more firms passed costs on. |
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Sector prospects Where the 3–12 month view points Strongest prospects Information Technology
XLK
▲ Improving | +0.73 |
| Industrials
XLI
▶ Steady | +0.71 |
| Energy
XLE
▲ Improving | +0.65 |
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| Weakest prospects Utilities
XLU
▶ Steady | +0.01 |
| Consumer Staples
XLP
▶ Steady | +0.07 |
| Health Care
XLV
▶ Steady | +0.11 |
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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 | Information Technology
XLK | | +0.73 | Favorable | +1.13 | +0.73 | ▲ +0.45 | | 2 | Industrials
XLI | | +0.71 | Favorable | +1.14 | +1.00 | ▶ −0.04 | | 3 | Energy
XLE | | +0.65 | Favorable | +0.81 | +0.50 | ▲ +0.45 | | 4 | Consumer Discretionary
XLY | | +0.58 | Favorable | +1.19 | +0.50 | ▶ +0.07 | | 5 | Financials
XLF | | +0.55 | Favorable | +1.00 | +0.50 | ▶ +0.18 | | 6 | Real Estate
XLRE | | +0.44 | Leaning Favorable | +1.07 | +0.15 | ▲ +0.45 | | 7 | Materials
XLB | | +0.43 | Leaning Favorable | +0.89 | +0.00 | ▶ +0.09 | | 8 | Communication Services
XLC | | +0.14 | Neutral | +0.40 | +0.00 | ▶ +0.00 | | 9 | Health Care
XLV | | +0.11 | Neutral | +0.25 | +0.00 | ▶ −0.06 | | 10 | Consumer Staples
XLP | | +0.07 | Neutral | +0.16 | +0.00 | ▶ +0.16 | | 11 | Utilities
XLU | | +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 | | +1.00 |
Economy continued to expand across the nation; manufacturing increased in all districts and services in most. | Labor markets strengthening with hiring increasing at a faster pace in most districts; wage pressure muted. | | Inflation Pressure (higher = headwind) | | +0.75 |
Modest consumer price increases but rising energy, building materials and steel input prices; pass-through in six districts. | Lending increased in most districts; refinancing declined with higher mortgage rates. | Cautious optimism among retailers, but concern about energy prices damping sales and summer travel. |
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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 | +2 | | Health CareXLV | · | · | · | · | · | · | · | +1 | · | · | · | +1 | | FinancialsXLF | · | +2 | +1 | +1 | · | +1 | · | · | · | +1 | +1 | +1 | | Consumer DiscretionaryXLY | +1 | +2 | +1 | · | +1 | +1 | +1 | +1 | +1 | +1 | · | +2 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | +1 | +1 | +1 | +1 | +1 | +2 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | +1 | · | · | +1 | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | +1 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | +1 | · | · | +1 | +1 | +1 | · | +1 | · | +1 | +2 | | MaterialsXLB | · | · | +1 | +1 | +1 | +1 | +2 | · | +1 | · | +1 | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Information Technology +2 San Francisco Semiconductor demand very strong; capacity utilization rising. Why it matters: Largest IT weight. | Industrials +2 Chicago Steel, cement and heavy trucks running at capacity. Why it matters: High Industrials weight. | Industrials +1 broad−based Broad-based Manufacturing and freight gains in all other districts. Why it matters: Broad Industrials strength. | Financials +2 New York Securities activity growing briskly; bonuses up over 30 percent. Why it matters: Largest Financials weight. | Consumer Discretionary +2 New York, San Francisco Retail strong; tourism strengthened further. Why it matters: Large Discretionary weights. | Real Estate +2 San Francisco Home sales near record pace. Why it matters: Large Real Estate weight. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Continues to gain strength. |
| New York Growing +1.5 Outlook ▲ Persistent strength. |
| Philadelphia Growing +1.0 Outlook ▲ Continued to expand. |
| Cleveland Growing +1.0 Outlook ▲ Remained strong. |
| Richmond Growing +1.5 Outlook ▲ Pace of expansion quickened. |
| Atlanta Growing +1.5 Outlook ▲ Remained robust. |
| Chicago Growing +1.5 Outlook ▲ Expanded solidly. |
| St. Louis Growing +1.0 Outlook ▲ Continued to improve. |
| Minneapolis Growing +1.0 Outlook ▲ Grew steadily. |
| Kansas City Growing +1.0 Outlook ▲ Continued to expand. |
| Dallas Growing +1.0 Outlook ▲ Continued to expand. |
| San Francisco Growing +1.5 Outlook ▲ Expanded at a solid pace. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco's +2 carries the largest IT weight, pushing the weighted score well above the simple average.
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| | Consumer Discretionary — New York and San Francisco at +2 dominate the weighted reading despite flat Cleveland and Dallas.
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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 |