EconomyxAI · Beige Book Sector Monitor March 2006Released March 15, 2006 |
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Conditions index +0.44 avg of 11 sectors, −2 to +2 |
| Outlook index +0.23 sectors with an outlook |
| Districts growing 11/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | Released March 15, 2006, with information collected before early March 2006 (date not printed in the PDF). | | ■ | Activity kept expanding in January and February at a mostly moderate or steady pace; San Francisco's solid expansion stayed on track and Dallas strengthened, while Richmond moderated and Philadelphia grew slowly. | | ■ | Retail sales posted solid January gains on warm weather and gift cards but softened in February in five districts; light vehicle sales were sluggish with high inventories. | | ■ | Manufacturing continued to expand with strong demand for construction materials, heavy trucks and machinery, though domestic autos struggled; housing slowed from high levels while commercial markets firmed. | | ■ | Employment increased with shortages of skilled workers; input costs kept rising, retail prices rose moderately, and household lending softened as rates rose. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Industrials
XLI
▶ Steady | +0.48 |
| Consumer Discretionary
XLY
▶ Steady | +0.42 |
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| Weakest prospects Utilities
XLU
▶ Steady | +0.00 |
| Consumer Staples
XLP
▶ Steady | +0.00 |
| Health Care
XLV
▶ Steady | +0.07 |
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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 | | +0.79 | Favorable | +1.26 | +1.00 | ▶ +0.13 | | 2 | Industrials
XLI | | +0.48 | Leaning Favorable | +0.93 | +0.50 | ▶ −0.07 | | 3 | Consumer Discretionary
XLY | | +0.42 | Leaning Favorable | +0.55 | +0.50 | ▶ +0.03 | | 4 | Information Technology
XLK | | +0.39 | Leaning Favorable | +0.64 | +0.50 | ▶ −0.06 | | 5 | Real Estate
XLRE | | +0.14 | Neutral | +0.42 | +0.00 | ▶ +0.01 | | 6 | Financials
XLF | | +0.14 | Neutral | +0.58 | +0.00 | ▶ +0.10 | | 7 | Materials
XLB | | +0.14 | Neutral | +0.23 | +0.00 | ▶ −0.19 | | 8 | Communication Services
XLC | | +0.07 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Health Care
XLV | | +0.07 | Neutral | +0.28 | +0.00 | ▶ −0.08 | | 10 | Consumer Staples
XLP | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Utilities
XLU | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 |
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 |
Expansion continued at a moderate or steady pace in most districts; San Francisco solid and Dallas strengthening; Richmond moderated. | Employment increasing in most locations; skilled-worker shortages nearly everywhere; Cleveland hiring sluggish and Kansas City layoffs outnumbered hires. | | Inflation Pressure (higher = headwind) | | −0.75 |
Ongoing input cost pressures for asphalt, cement, lumber, copper and paper; retail prices up moderately; labor costs little changed. | Household lending softened as rates rose; C&I lending modest; margins squeezed by competition. | Manufacturers in Boston and Philadelphia expect continued expansion and Cleveland a pickup; heavy-equipment firms budgeting large capital expansions. |
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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 | · | · | · | · | +1 | | Consumer DiscretionaryXLY | · | · | · | · | · | +1 | +1 | · | +1 | +1 | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | +1 | +1 | · | +1 | +1 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | +2 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | · | · | · | · | · | · | · | · | +1 | +1 | +1 | | MaterialsXLB | · | · | · | +1 | · | · | +1 | · | +1 | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy +2 Dallas Rig count at a 20-year high; activity extremely strong. Why it matters: Largest Energy weight. | Industrials +1 broad−based Broad-based Manufacturing expanded in eleven districts. Why it matters: Broad Industrials strength. | Financials +1 New York Securities strong; bonuses up 17%. Why it matters: Largest Financials weight. | Information Technology +1 San Francisco, Dallas Semiconductor orders strong; flash memory demand. Why it matters: IT positive. | Consumer Discretionary +1 San Francisco, Atlanta Tourism vigorous; retail sales strong. Why it matters: Discretionary support. | Consumer Discretionary +1 Chicago, Kansas City, Minneapolis Restaurants very strong; sales above plan. Why it matters: Discretionary support. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Generally positive with soft spots. |
| New York Growing +1.0 Outlook ▲ Expanded at a good pace. |
| Philadelphia Flat Outlook ▶ Grew at a slow pace. |
| Cleveland Growing +1.0 Outlook ▲ Steady pace, broad-based gains. |
| Richmond Growing +0.5 Outlook ▲ Growth moderated. |
| Atlanta Growing +1.0 Outlook ▲ Upbeat. |
| Chicago Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| St. Louis Growing +0.5 Outlook ▲ Expanded modestly. |
| Minneapolis Growing +0.5 Outlook ▲ Grew at a moderate pace. |
| Kansas City Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| Dallas Growing +1.0 Outlook ▲ Strengthened. |
| San Francisco Growing +1.0 Outlook ▲ Solid expansion on track. |
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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 — Weak housing offsets commercial gains, leaving the weighted score near zero.
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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 |