EconomyxAI · Beige Book Sector Monitor June 2008Released June 11, 2008 |
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Conditions index −0.07 avg of 11 sectors, −2 to +2 |
| Outlook index +0.20 sectors with an outlook |
| Districts growing 0/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | Released June 11, 2008, with information collected before June 2, 2008. | | ■ | Economic activity softened or slowed in seven districts, while Philadelphia, Cleveland, Atlanta, St. Louis and San Francisco described conditions as stable or little changed. | | ■ | Consumer spending was weak, with autos falling sharply on high gasoline prices; tourism was mixed, strong in Atlanta but weaker in Chicago and Minneapolis. | | ■ | Manufacturing was mixed: steel, heavy machinery, energy equipment and exports strong; housing-related and auto output weak. Residential real estate stayed weak with foreclosures rising. | | ■ | Input cost pressures were widespread and broadening; all districts reported tighter lending standards, while drilling reached its highest level in 20 years in Dallas. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Information Technology
XLK
▲ Turning up | +0.35 |
| Materials
XLB
▲ Turning up | +0.34 |
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| Weakest prospects Financials
XLF
▶ Steady | −0.70 |
| Consumer Discretionary
XLY
▶ Steady | −0.61 |
| Real Estate
XLRE
▶ Steady | −0.55 |
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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 | | +0.91 | Favorable | +1.19 | +1.00 | ▶ +0.52 | | 2 | Information Technology
XLK | | +0.35 | Leaning Favorable | +0.54 | +0.50 | ▲ +0.40 | | 3 | Materials
XLB | | +0.34 | Leaning Favorable | +0.37 | n/a | ▲ +0.37 | | 4 | Health Care
XLV | | +0.10 | Neutral | +0.36 | n/a | ▶ −0.17 | | 5 | Utilities
XLU | | −0.03 | Neutral | +0.00 | n/a | ▶ +0.00 | | 6 | Consumer Staples
XLP | | −0.07 | Neutral | +0.09 | n/a | ▶ −0.15 | | 7 | Industrials
XLI | | −0.09 | Neutral | +0.11 | +0.50 | ▲ +0.18 | | 8 | Communication Services
XLC | | −0.13 | Neutral | −0.10 | n/a | ▶ −0.14 | | 9 | Real Estate
XLRE | | −0.55 | Unfavorable | −1.11 | −0.48 | ▶ −0.06 | | 10 | Consumer Discretionary
XLY | | −0.61 | Unfavorable | −1.09 | −0.50 | ▶ −0.19 | | 11 | Financials
XLF | | −0.70 | Unfavorable | −1.11 | n/a | ▶ −0.19 |
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 |
Seven districts softer or slower; five stable or little changed. | Labor markets softened; hiring limited; wage pressures moderate. | | Inflation Pressure (higher = headwind) | | −1.50 |
Input cost pressures widespread for energy, food and metals; more firms passing on costs. | All districts reported tighter credit standards; credit quality deteriorating, especially consumer and real estate. | Outlook subdued; manufacturers in Philadelphia and Kansas City expect modest improvement. |
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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 | | Health CareXLV | +1 | · | · | · | +1 | · | · | · | · | · | · | +1 | | FinancialsXLF | −1 | −2 | · | −1 | −1 | −1 | · | −1 | −1 | · | −1 | −1 | | Consumer DiscretionaryXLY | −1 | −1 | −1 | · | −1 | · | −1 | −1 | −1 | −1 | −1 | −2 | | Communication ServicesXLC | · | −1 | · | · | +1 | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | · | · | · | −1 | −1 | +1 | · | · | +1 | +1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | +1 | · | | EnergyXLE | · | · | · | +1 | · | · | · | · | +1 | +2 | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | −2 | · | −1 | −1 | −1 | −1 | −2 | −2 | · | −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 Drilling at its highest level in 20 years. Why it matters: Energy leads the index. | Real Estate −2 New York Manhattan co-op sales down sharply; office prices down 15-20 percent. Why it matters: Large-weight district drags Real Estate. | Financials −2 New York Delinquencies up in all loan categories. Why it matters: Pulls Financials lower. | Consumer Discretionary −2 San Francisco Vehicle sales 'dismal'. Why it matters: Largest Discretionary weight negative. | Energy +2 Kansas City Energy activity robust; rig count surging. Why it matters: Broadens Energy strength. | Real Estate −2 St. Louis, Minneapolis Permits down 33-67 percent. Why it matters: Deepens Real Estate. |
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Twelve Fed districts District roundup Boston Contracting −0.5 Softening; machinery orders have fallen off a cliff. |
| New York Contracting −1.0 Generally weaker; delinquencies up in all categories. |
| Philadelphia Flat Outlook ▲ Stabilizing; manufacturing steady. |
| Cleveland Flat Stable; steel steady to up. |
| Richmond Contracting −1.0 Edged lower; retail declining. |
| Atlanta Contracting −1.0 Weak; tourism strong. |
| Chicago Flat Slower expansion; steel near capacity. |
| St. Louis Flat Flat; services strengthened. |
| Minneapolis Contracting −1.0 Sluggish; Twin Cities permits down 67 percent. |
| Kansas City Flat Outlook ▲ Modest growth; energy robust. |
| Dallas Flat Softening outside energy; rigs at 20-year high. |
| San Francisco Flat Little changed; housing exceptionally weak. |
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Where the signal is thin or split Divergences to watch | ENERGY vs CONSUMER: record oil prices lift Energy while squeezing autos and discretionary spending.
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| | Financials — all districts tightened standards.
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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 |