EconomyxAI · Beige Book Sector Monitor March 1999Released March 17, 1999 · Data through March 8 |
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Conditions index +0.32 avg of 11 sectors, −2 to +2 |
| Outlook index +0.30 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 8/11 sectors improving |
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This release in brief The read | ■ | Districts reported further gains in January and February despite weakness in agriculture and a few manufacturing industries. | | ■ | Consumer spending stayed strong on post-holiday discounting and mild weather, and motor vehicle sales rose led by light trucks. | | ■ | Manufacturing improved in most districts, strengthening in New York, Philadelphia, Richmond, St. Louis, Minneapolis and San Francisco, with semiconductors and high-tech shipments up. | | ■ | Residential real estate stayed vigorous in nearly all districts, with record construction in St. Louis and Minneapolis builders' best January in seven years. | | ■ | Labor markets tightened further with faster wage gains more widespread, but goods prices stayed little changed; oil drilling kept falling with Kansas City rigs 44% below a year ago. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Discretionary
XLY
▲ Improving | +0.73 |
| Information Technology
XLK
▶ Steady | +0.58 |
| Real Estate
XLRE
▶ Steady | +0.49 |
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| Weakest prospects | Utilities
XLU
▶ Steady | −0.10 |
| Consumer Staples
XLP
▶ Steady | +0.18 |
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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 | Consumer Discretionary
XLY | | +0.73 | Favorable | +1.33 | +0.59 | ▲ +0.49 | | 2 | Information Technology
XLK | | +0.58 | Favorable | +0.64 | +1.00 | ▶ +0.53 | | 3 | Real Estate
XLRE | | +0.49 | Leaning Favorable | +1.20 | +0.07 | ▶ −0.01 | | 4 | Industrials
XLI | | +0.48 | Leaning Favorable | +0.49 | +0.66 | ▲ +0.51 | | 5 | Communication Services
XLC | | +0.34 | Leaning Favorable | +0.40 | n/a | ▲ +0.20 | | 6 | Financials
XLF | | +0.30 | Leaning Favorable | +0.63 | +0.50 | ▶ +0.10 | | 7 | Materials
XLB | | +0.26 | Leaning Favorable | −0.09 | n/a | ▲ +0.41 | | 8 | Health Care
XLV | | +0.26 | Leaning Favorable | +0.29 | n/a | ▶ +0.14 | | 9 | Consumer Staples
XLP | | +0.18 | Leaning Favorable | +0.22 | n/a | ▶ +0.22 | | 10 | Utilities
XLU | | −0.10 | Neutral | −0.08 | n/a | ▶ −0.08 | | 11 | Energy
XLE | | −0.95 | Unfavorable | −1.50 | −1.00 | ▶ −0.32 |
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 |
Further gains in most districts; manufacturing expanded in most and strengthened in six, while consumer spending and construction stayed strong. | Labor markets remained taut with higher employment nearly everywhere; seven districts reported greater wage pressure and finding qualified workers got harder. | | Inflation Pressure (higher = headwind) | | +0.00 |
Goods prices little changed and firms reluctant to raise them; lumber, drywall and insulation rose and health care costs escalated, while Dallas saw more declines than increases. | Lenders were upbeat; loan demand strong in Atlanta and San Francisco and picking up in New York and Kansas City, with standards stable; only St. Louis reported a decline. | Expectations mostly positive: Philadelphia and Richmond producers expect higher orders, Minneapolis called conditions 'nothing short of awesome', and San Francisco respondents grew optimistic. |
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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 | · | · | · | · | · | · | · | · | · | · | +1 | | FinancialsXLF | −1 | +1 | · | · | · | +1 | +1 | −1 | +1 | +1 | +1 | +1 | | Consumer DiscretionaryXLY | +1 | +1 | +1 | +2 | +2 | +1 | +1 | · | +1 | +1 | +1 | +2 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | · | +1 | +1 | +1 | +1 | · | +1 | +1 | +1 | · | · | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | +1 | | EnergyXLE | · | · | · | · | · | −1 | · | −1 | −2 | −2 | −2 | −1 | | UtilitiesXLU | · | · | · | · | −1 | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +2 | +2 | +2 | +2 | · | +1 | +2 | +2 | +1 | +1 | +1 | | MaterialsXLB | −1 | · | · | · | · | · | · | · | −1 | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy −2 Dallas Drilling fell 23 of the last 25 weeks; contacts do not believe it has bottomed. Why it matters: Dallas carries the largest Energy weight. | Information Technology +1 San Francisco Communications equipment very strong; software and internet services strong. Why it matters: San Francisco is about 47% of IT, so a second straight +1 keeps IT favorable. | Real Estate +2 broad−based New York, Philadelphia, Cleveland, Richmond, St. Louis, Minneapolis Market strength 'amazing'; sales pace 'as fast as a race car'. Why it matters: Six +2 reads make this the strongest Real Estate reading in the series. | Industrials +1 broad−based New York, Philadelphia, Cleveland, Richmond, Chicago, St. Louis, Minneapolis Manufacturing improved in most districts; heavy truck orders beat expectations. Why it matters: No negative Industrials reads lifts the sector sharply from January. | Consumer Discretionary +2 San Francisco, Cleveland, Richmond Retail sales rapid; auto sales vigorous; better-than-expected sales with little discounting. Why it matters: San Francisco's large weight at +2 pushes Discretionary higher. | Financials +1 New York, San Francisco, Chicago, Dallas Loan demand increased; bankers more willing to lend. Why it matters: Heavy-weight districts positive lift weighted Financials. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Economic activity continues to expand. |
| New York Growing +2.0 Continues to grow at a brisk pace. |
| Philadelphia Growing +1.0 Outlook ▲ Business conditions generally improved. |
| Cleveland Growing +1.0 Still growing, somewhat unevenly. |
| Richmond Growing +1.0 Outlook ▲ Advanced at a healthy pace. |
| Atlanta Growing +1.0 Outlook ▲ Moderate growth into late winter. |
| Chicago Growing +1.0 Expanded modestly in early 1999. |
| St. Louis Growing +1.0 Outlook ▲ Operating at a high level, growing moderately. |
| Minneapolis Growing +2.0 Outlook ▲ Pace picked up from strong conditions. |
| Kansas City Growing +1.0 Outlook ▲ Continued to grow moderately. |
| Dallas Growing +1.0 Continued to expand. |
| San Francisco Growing +2.0 Outlook ▲ Strong performance in recent weeks. |
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Where the signal is thin or split Divergences to watch | Industrials — eight +1s and no negatives, the broadest manufacturing improvement since 1997.
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| | Energy — Minneapolis, Kansas City and Dallas at -2 with three -1s; Energy remains the weakest sector by far.
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| | Financials — weighted above unweighted because New York and San Francisco are positive while the negatives are lighter-weight Boston and St. Louis.
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| | Information Technology — San Francisco and Dallas both +1 again keep weighted IT well above its unweighted average.
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| | Utilities — only Richmond's weather-driven -1; COMMUNICATION SERVICES and CONSUMER STAPLES have only San Francisco reads.
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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 |