EconomyxAI · Beige Book Sector Monitor June 2009Released June 10, 2009 |
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Conditions index −0.50 avg of 11 sectors, −2 to +2 |
| Outlook index −0.09 sectors with an outlook |
| Districts growing 0/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released June 10, 2009, with information collected before June 1, 2009. | | ■ | Economic conditions remained weak or deteriorated further from mid-April through May, but five districts said the downward trend was moderating and several reported improved expectations. | | ■ | Consumers focused on necessities and new car sales stayed depressed with tight credit, but eight districts reported an uptick in home sales and new construction appeared to stabilize at very low levels. | | ■ | Manufacturing declined or stayed low in most districts, though New York said it stabilized, Richmond saw rising orders and high-tech firmed in Boston, Dallas and San Francisco; commercial real estate weakened in every district. | | ■ | Credit conditions stayed stringent, energy activity kept weakening with Kansas City rigs 60 percent below peak, and prices were flat or falling except for oil. |
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Sector prospects Where the 3–12 month view points Strongest prospects Information Technology
XLK
▲ Improving | +0.43 |
| Health Care
XLV
▶ Steady | +0.00 |
| Industrials
XLI
▲ Improving | +0.00 |
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| Weakest prospects | Materials
XLB
▼ Turning down | −0.52 |
| Consumer Discretionary
XLY
▶ Steady | −0.51 |
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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 | | +0.43 | Leaning Favorable | +0.52 | +0.00 | ▲ +1.47 | | 2 | Health Care
XLV | | +0.00 | Neutral | +0.08 | +0.00 | ▶ −0.02 | | 3 | Industrials
XLI | | +0.00 | Neutral | −0.62 | +0.11 | ▲ +1.09 | | 4 | Consumer Staples
XLP | | −0.02 | Neutral | +0.20 | +0.00 | ▼ −0.28 | | 5 | Communication Services
XLC | | −0.02 | Neutral | +0.00 | +0.00 | ▶ +0.07 | | 6 | Utilities
XLU | | −0.02 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 7 | Financials
XLF | | −0.15 | Leaning Unfavorable | −0.64 | +0.00 | ▶ +0.28 | | 8 | Real Estate
XLRE | | −0.24 | Leaning Unfavorable | −1.04 | −0.10 | ▲ +0.64 | | 9 | Consumer Discretionary
XLY | | −0.51 | Unfavorable | −1.01 | −0.50 | ▶ +0.44 | | 10 | Materials
XLB | | −0.52 | Unfavorable | −1.35 | +0.00 | ▼ −0.32 | | 11 | Energy
XLE | | −0.66 | Unfavorable | −1.64 | −0.50 | ▶ −0.09 |
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 |
Conditions weak or deteriorating further; five districts saw moderation. | Labor markets weak; wages flat or falling; some signs manufacturing job losses moderating. | | Inflation Pressure (higher = headwind) | | +0.75 |
Prices flat or falling at all stages except oil. | Credit stringent or tighter; Chicago credit conditions improved; Kansas City no erosion in loan quality. | Expectations improved in several districts though no substantial increase seen through year-end. |
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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 | | Health CareXLV | +1 | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | −1 | · | −1 | · | −1 | −1 | −1 | −1 | −1 | · | −1 | −1 | | Consumer DiscretionaryXLY | −1 | · | −1 | −1 | −1 | −1 | −1 | −1 | · | −1 | · | −2 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | · | −2 | −2 | +1 | · | −1 | −1 | −1 | · | · | −1 | | Consumer StaplesXLP | · | · | +1 | · | · | · | +1 | · | +1 | · | · | · | | EnergyXLE | −1 | −1 | −1 | −2 | −1 | −1 | −1 | −1 | −2 | −2 | −2 | −1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | −2 | −1 | −1 | · | −1 | −1 | −1 | −1 | · | −1 | −1 | | MaterialsXLB | −1 | −1 | −1 | −2 | −1 | −1 | −1 | −1 | −2 | −1 | −1 | −2 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy −2 Dallas Texas rigs down 15 percent in six weeks. Why it matters: Large Energy weight. | Energy −2 Kansas City Rigs 60 percent below peak. Why it matters: Energy at the bottom. | Information Technology +1 San Francisco Conditions improved for IT makers. Why it matters: Largest IT weight turns positive. | Real Estate −2 New York Manhattan commercial and housing markets weakening. Why it matters: Large Real Estate weight. | Consumer Discretionary −2 San Francisco Retail sales anemic; luxury hotel occupancy down. Why it matters: Largest Discretionary weight. | Industrials +1 Richmond New orders and shipments grew. Why it matters: Industrials improving. |
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Twelve Fed districts District roundup Boston Contracting −1.0 Outlook ▶ Ongoing declines; biopharma an exception. |
| New York Contracting −0.5 Outlook ▲ Signs of stabilizing; manufacturing optimism. |
| Philadelphia Contracting −1.0 Outlook ▲ Slow; outlook improved slightly. |
| Cleveland Contracting −1.0 Outlook ▶ Weakened somewhat; coal production fell. |
| Richmond Contracting −0.5 Outlook ▶ Sluggish; encouraging trends emerging. |
| Atlanta Contracting −1.0 Outlook ▲ Contracting at moderated pace; outlook improved. |
| Chicago Contracting −1.5 Outlook ▶ Weakened; credit conditions improved. |
| St. Louis Contracting −1.5 Outlook ▶ Weakened further. |
| Minneapolis Contracting −0.5 Outlook ▶ Contraction moderated. |
| Kansas City Contracting −0.5 Outlook ▲ Declined at slower pace; firmer expectations. |
| Dallas Contracting −0.5 Outlook ▶ Bouncing along the bottom. |
| San Francisco Contracting −1.0 Outlook ▶ Slowed further; IT products improving. |
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Where the signal is thin or split Divergences to watch | It — first positive IT reading since mid-2008 as high-tech activity firmed.
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| | Energy — weakest sector as drilling collapse continued.
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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 |