EconomyxAI · Sector Watch June 2005Released June 15, 2005 |
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Conditions index +0.48 avg of 11 sectors, −2 to +2 |
| Outlook index +0.25 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | Released June 15, 2005, with information collected before June 6, 2005. | | ■ | Business activity continued to expand in all twelve districts from mid-April through May; most called the pace moderate, solid or well-sustained, Philadelphia said growth eased and Boston and Cleveland saw unevenness. | | ■ | Retail results were mixed, with unseasonable weather and high gasoline prices hurting May sales in several districts; tourism stayed strong, with Manhattan room rates up 17 percent. | | ■ | Manufacturing continued to expand in most districts, with defense, aircraft and computing equipment strong; several districts said commercial real estate was improving. | | ■ | Labor markets improved with spot shortages of skilled workers; retail price increases stayed modest while construction materials, transportation and health care costs rose. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Information Technology
XLK
▶ Steady | +0.42 |
| Industrials
XLI
▶ Steady | +0.41 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | −0.00 |
| Utilities
XLU
▶ Steady | +0.01 |
| Materials
XLB
▼ Turning down | +0.06 |
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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 | | +0.79 | Favorable | +1.26 | +1.00 | ▶ +0.00 | | 2 | Information Technology
XLK | | +0.42 | Leaning Favorable | +0.64 | +0.50 | ▶ +0.09 | | 3 | Industrials
XLI | | +0.41 | Leaning Favorable | +0.88 | +0.50 | ▶ −0.10 | | 4 | Consumer Discretionary
XLY | | +0.29 | Leaning Favorable | +0.47 | +0.48 | ▶ −0.17 | | 5 | Real Estate
XLRE | | +0.28 | Leaning Favorable | +0.85 | +0.03 | ▶ +0.12 | | 6 | Communication Services
XLC | | +0.25 | Leaning Favorable | +0.47 | +0.00 | ▲ +0.41 | | 7 | Health Care
XLV | | +0.13 | Neutral | +0.28 | +0.00 | ▶ +0.04 | | 8 | Financials
XLF | | +0.13 | Neutral | +0.27 | +0.22 | ▶ −0.32 | | 9 | Materials
XLB | | +0.06 | Neutral | +0.13 | +0.00 | ▼ −0.55 | | 10 | Utilities
XLU | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Consumer Staples
XLP | | −0.00 | 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 | | +0.75 |
All districts expanding; most moderate to solid, Philadelphia eased, Boston and Cleveland uneven. | Labor markets improved in most districts; shortages of skilled energy, construction, nursing and finance workers; wages rising in professional services. | | Inflation Pressure (higher = headwind) | | +0.50 |
Retail price increases modest; San Francisco final goods inflation edged up on energy pass-through; construction materials, transport and health costs up. | Loan demand increased or remained solid; most districts cite higher commercial lending tied to capex; credit quality good. | Manufacturers planning higher capex and plant expansions; tourism officials optimistic about summer. |
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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 | | Health CareXLV | · | · | · | · | +1 | · | · | · | · | · | · | +1 | | FinancialsXLF | · | −1 | +1 | +1 | +1 | +1 | +1 | · | · | · | +1 | +1 | | Consumer DiscretionaryXLY | +1 | +1 | −1 | · | +1 | · | · | · | · | +1 | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | +1 | +1 | | IndustrialsXLI | · | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | · | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | +2 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | +1 | +1 | · | +2 | +1 | · | · | · | +1 | +1 | +1 | | MaterialsXLB | · | · | +1 | −1 | · | · | +1 | · | +1 | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy +2 Dallas Oil field services turning down work; day rates skyrocketing. Why it matters: Largest Energy weight. | Real Estate +2 Richmond Housing popping; commercial leasing up strongly. Why it matters: Real Estate strength. | Financials −1 New York Sharper slowdown in securities activity. Why it matters: Largest Financials weight. | Financials +1 broad−based Broad-based Lending up in seven districts. Why it matters: Financials offset. | Industrials +1 broad−based Broad-based Manufacturing expanded in ten districts. Why it matters: Broad Industrials strength. | Consumer Discretionary −1 Philadelphia Retail and auto sales declined. Why it matters: Discretionary drag. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Continued growth, some sectors lagging. |
| New York Growing +1.0 Outlook ▲ Well-sustained pace. |
| Philadelphia Growing +0.5 Outlook ▲ Expanded, pace eased. |
| Cleveland Growing +0.5 Outlook ▲ Uneven but supportive of growth. |
| Richmond Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Atlanta Growing +1.0 Outlook ▲ Solid. |
| Chicago Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| St. Louis Growing +1.0 Outlook ▲ Continued to expand. |
| Minneapolis Growing +1.0 Outlook ▲ Moderate growth. |
| Kansas City Growing +1.0 Outlook ▲ Expanded moderately. |
| Dallas Growing +1.0 Outlook ▲ Continued to expand. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a solid pace. |
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Where the signal is thin or split Divergences to watch | Financials — New York's -1 carries the largest weight and pulls the weighted Financials score below the simple average despite seven +1s.
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| | Energy — Dallas's +2 continues to dominate the weighted Energy score.
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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 |