EconomyxAI · Sector Watch June 2006Released June 14, 2006 |
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Conditions index +0.41 avg of 11 sectors, −2 to +2 |
| Outlook index +0.14 sectors with an outlook |
| Districts growing 9/12 per National Summary |
| Positive momentum 2/11 sectors improving |
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This release in brief The read | ■ | Released June 14, 2006, with information collected before early June 2006 (date not printed in the PDF). | | ■ | Activity continued to expand from mid-April to early June but with some signs of deceleration; growth moderated in Atlanta, Kansas City, Richmond and San Francisco, while Philadelphia improved. | | ■ | Consumer spending growth slowed, with weakness at discount stores and among lower-income shoppers; auto sales were weak, especially SUVs and light trucks, but tourism stayed upbeat. | | ■ | Manufacturing still expanded quite strongly, led by energy, semiconductor and aerospace supply, while residential real estate cooled across the country and commercial real estate strengthened. | | ■ | Labor markets kept tightening with intensifying skill shortages; cost pressures rose in nine districts and pass-through was more common than in the last report. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Industrials
XLI
▶ Steady | +0.46 |
| Information Technology
XLK
▶ Steady | +0.40 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | −0.22 |
| Financials
XLF
▼ Turning down | −0.04 |
| Utilities
XLU
▶ Steady | +0.01 |
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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 | | +0.76 | Favorable | +1.26 | +1.00 | ▶ +0.00 | | 2 | Industrials
XLI | | +0.46 | Leaning Favorable | +0.90 | +0.50 | ▶ −0.10 | | 3 | Information Technology
XLK | | +0.40 | Leaning Favorable | +0.64 | +0.50 | ▶ +0.01 | | 4 | Materials
XLB | | +0.26 | Leaning Favorable | +0.47 | +0.00 | ▶ +0.19 | | 5 | Consumer Discretionary
XLY | | +0.14 | Neutral | +0.57 | +0.00 | ▶ −0.02 | | 6 | Health Care
XLV | | +0.08 | Neutral | +0.29 | +0.00 | ▶ −0.03 | | 7 | Communication Services
XLC | | +0.02 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 8 | Consumer Staples
XLP | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Utilities
XLU | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 10 | Financials
XLF | | −0.04 | Neutral | +0.26 | +0.00 | ▼ −0.39 | | 11 | Real Estate
XLRE | | −0.22 | Leaning Unfavorable | +0.08 | −0.50 | ▶ −0.21 |
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 | | +0.50 |
All districts expanding but four moderated; seven unchanged; Philadelphia improved. | Labor markets continued to tighten; skill shortages in nine districts, intensifying in six. | | Inflation Pressure (higher = headwind) | | −1.00 |
Cost pressures increased in nine districts; manufacturers raising prices; pass-through more prevalent; natural gas the notable decline. | Lending mixed: slowing in New York, Chicago and Atlanta; commercial steady to up; mortgages softening. | New York noted rising concern about the second half; gasoline prices and rising rates cloud the retail outlook. |
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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 | | Consumer DiscretionaryXLY | · | +1 | · | +1 | · | +1 | · | −1 | +1 | +1 | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | +1 | +1 | · | · | +1 | +1 | +1 | +2 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | +2 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | · | · | · | · | · | · | −1 | · | · | +1 | · | | MaterialsXLB | · | · | · | +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 Texas rig count rising rapidly. Why it matters: Largest Energy weight. | Industrials +2 Kansas City Manufacturing expanded strongly. Why it matters: Industrials strength. | Industrials +1 broad−based Broad-based Manufacturing grew in nine districts. Why it matters: Broad Industrials support. | Information Technology +1 San Francisco, Boston, Dallas Semiconductor utilization above 90%. Why it matters: IT positive. | Consumer Discretionary −1 St. Louis Retail and car sales down from a year ago. Why it matters: Discretionary drag. | Consumer Discretionary +1 New York, Cleveland, Atlanta Tourism picked up; retail beat expectations. Why it matters: Discretionary support. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Continues to expand. |
| New York Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| Philadelphia Growing +0.5 Outlook ▲ Conditions improved. |
| Cleveland Growing +0.5 Outlook ▲ Continued expanding. |
| Richmond Flat Outlook ▶ Grew more slowly. |
| Atlanta Flat Outlook ▶ Mixed. |
| Chicago Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| St. Louis Flat Outlook ▶ Increased modestly. |
| Minneapolis Growing +0.5 Outlook ▲ Grew at a steady pace. |
| Kansas City Growing +0.5 Outlook ▲ Grew moderately. |
| Dallas Growing +1.0 Outlook ▲ Expanded quite strongly. |
| 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 | Energy — Dallas's +2 dominates the weighted Energy score.
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| | Real Estate — Broad housing softness leaves the weighted score near zero despite commercial gains.
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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 |