EconomyxAI · Beige Book Sector Monitor March 1998Released March 18, 1998 · Data through March 9 |
| |
Conditions index +0.44 avg of 11 sectors, −2 to +2 |
| Outlook index +0.33 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 6/11 sectors improving |
|
|
This release in brief The read | ■ | All districts showed overall strength, though a few noted some moderation. | | ■ | Retail sales beat expectations in many districts on mild weather, while car sales were generally down and dealer inventories too high. | | ■ | Industrial activity rose in most districts, with Chicago running near capacity and Richmond rebounding sharply, but apparel declined and exports to Asia kept falling. | | ■ | Every district reported strong housing markets on low rates and mild weather, and commercial real estate was uniformly strong with rising rents and more speculative building. | | ■ | Labor shortages widened and wage pressures increased, but product price pressures stayed 'eerily calm' as competition, productivity and Asia held costs down. |
|
Sector prospects Where the 3–12 month view points Strongest prospects Real Estate
XLRE
▲ Improving | +0.87 |
| Consumer Discretionary
XLY
▶ Steady | +0.51 |
| Financials
XLF
▲ Turning up | +0.47 |
|
|
| Weakest prospects Energy
XLE
▼ Turning down | −0.38 |
| Information Technology
XLK
▶ Steady | −0.14 |
| Utilities
XLU
▶ Steady | −0.03 |
|
|
|
|
All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
|---|
| 1 | Real Estate
XLRE | | +0.87 | Favorable | +1.40 | +0.74 | ▲ +0.48 | | 2 | Consumer Discretionary
XLY | | +0.51 | Favorable | +0.70 | +0.65 | ▶ +0.12 | | 3 | Financials
XLF | | +0.47 | Leaning Favorable | +0.89 | n/a | ▲ +0.59 | | 4 | Industrials
XLI | | +0.37 | Leaning Favorable | +0.85 | +0.39 | ▶ +0.01 | | 5 | Communication Services
XLC | | +0.28 | Leaning Favorable | +0.42 | n/a | ▶ +0.02 | | 6 | Materials
XLB | | +0.19 | Leaning Favorable | +0.23 | +0.70 | ▲ +0.06 | | 7 | Health Care
XLV | | +0.03 | Neutral | +0.04 | n/a | ▶ −0.06 | | 8 | Consumer Staples
XLP | | −0.01 | Neutral | +0.00 | n/a | ▶ −0.03 | | 9 | Utilities
XLU | | −0.03 | Neutral | −0.08 | n/a | ▶ −0.08 | | 10 | Information Technology
XLK | | −0.14 | Neutral | +0.02 | n/a | ▶ −0.26 | | 11 | Energy
XLE | | −0.38 | Leaning Unfavorable | +0.41 | −0.84 | ▼ −0.61 |
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 | | +1.25 |
All district economies showed overall strength; Richmond and Chicago accelerated and San Francisco called its expansion vigorous, while Cleveland and Dallas noted some moderation. | Shortages of entry-level and skilled workers were reported almost everywhere and wage pressures increased compared with recent reports; temp wages in Boston up as much as 15%. | | Inflation Pressure (higher = headwind) | | +0.00 |
Product prices stayed calm: raw material costs barely rose, Asian currency moves pushed down commodity, chip and petrochemical prices, and competition limited pass-through. | Most districts reported moderate to vigorous loan demand, with a refinancing boom on low rates; Philadelphia volumes slipped and Kansas City was flat, and some worried competition was loosening standards. | Retailers, homebuilders and San Francisco respondents were optimistic, but the energy outlook weakened substantially (Dallas, Minneapolis) and exporters expected Asian effects by midyear. |
|
Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
|---|
| Information TechnologyXLK | · | · | · | · | · | · | · | · | +1 | · | · | · | | Health CareXLV | · | · | · | · | · | · | · | · | +1 | · | · | · | | FinancialsXLF | +1 | +1 | · | +1 | +1 | +1 | +1 | +1 | · | · | +1 | +1 | | Consumer DiscretionaryXLY | +1 | +1 | · | +1 | +1 | +1 | +2 | · | +1 | · | +1 | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | +1 | · | · | +1 | | IndustrialsXLI | +1 | +1 | +1 | +1 | +1 | · | +2 | +1 | +1 | · | · | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | −1 | +1 | · | | UtilitiesXLU | · | · | · | · | −1 | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +2 | +1 | +1 | +2 | +1 | +2 | +1 | +2 | +1 | +2 | +1 | | MaterialsXLB | · | · | · | +1 | · | · | +1 | · | +1 | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
|
Top highlights What moved the scores Financials +1 New York Stronger loan demand; 75% of bankers report higher mortgage demand. Why it matters: New York is 28% of Financials; flipping from -1 to +1 is the largest single swing this release. | Energy +1 Dallas Energy activity strong 'with some hints of softening'; outlook weakened substantially. Why it matters: Dallas carries 45% of Energy; dropping from +2 to +1 and a -1 outlook pull Energy down. | Real Estate +2 broad−based New York, Richmond, Chicago, Minneapolis, Dallas Commercial real estate 'picked up dramatically'; new home sales 'soaring'. Why it matters: Five +2 reads make Real Estate the strongest sector. | Industrials +2 Chicago Heavy trucks running 'full tilt'; a steel producer turning orders away. Why it matters: The only +2 in Industrials keeps the sector firm as Boston and Cleveland ease to +1. | Consumer Discretionary +2 Chicago Sales above expectations and broad-based; record motorcycle sales. Why it matters: Chicago's +2 and broad +1s lift Discretionary despite weak car sales. | Energy −1 Kansas City District rig count down 5% in January and 1.4% more in February. Why it matters: First negative Energy read of 1998. |
|
Twelve Fed districts District roundup Boston Growing +1.0 Economy continues to expand; retail picked up. |
| New York Growing +1.0 Continued to grow briskly in early 1998. |
| Philadelphia Growing +1.0 Outlook ▲ Mixed but positive overall. |
| Cleveland Growing +1.0 Outlook ▲ Continues to grow, but at a moderating pace. |
| Richmond Growing +1.0 Expanded at a somewhat faster clip. |
| Atlanta Growing +1.0 Outlook ▲ Continues to expand at a moderate pace. |
| Chicago Growing +1.0 Outlook ▶ Expansion picked up modestly. |
| St. Louis Growing +1.0 Outlook ▲ Stable business growth, few signs of rising prices. |
| Minneapolis Growing +1.0 Outlook ▲ Steady to strong growth in most sectors. |
| Kansas City Growing +1.0 Outlook ▲ Continues to grow at a moderate pace. |
| Dallas Growing +1.0 Outlook ▲ Same pace or a little slower. |
| San Francisco Growing +2.0 Outlook ▲ Continued its vigorous economic expansion. |
|
|
Where the signal is thin or split Divergences to watch | Real Estate — eleven districts +1 or +2; the broadest strength of any sector, weighted and unweighted agree.
|
| | Information Technology — San Francisco (47%) stays 0 as Asian demand cuts high-tech sales; only Minneapolis is positive, so IT stays near neutral.
|
| | Financials — New York flips to +1 from -1, lifting weighted Financials sharply even though the unweighted count barely changes.
|
| | Energy — Dallas easing to +1 and Kansas City -1 cut weighted Energy sharply from January.
|
| | Consumer Staples — no directional coverage; UTILITIES has only Richmond's weather-driven -1.
|
|
|
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 |