EconomyxAI · Sector Watch May 2010Released June 9, 2010 |
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Conditions index +0.38 avg of 11 sectors, −2 to +2 |
| Outlook index +0.38 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 5/11 sectors improving |
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This release in brief The read | ■ | Released June 9, 2010, with information collected before May 28, 2010. | | ■ | Economic activity continued to improve across all twelve districts, though many described the pace as 'modest'; consumer spending, tourism and business spending rose. | | ■ | Retail and vehicle sales increased, with spring apparel strong; auto production failed to keep up with demand, and hotel occupancy and convention activity rose, though the Gulf oil spill brought some cancellations. | | ■ | Manufacturing and transportation kept improving in all twelve districts, with steel, autos, heavy equipment, medical equipment and high-tech up; housing got a lift from the April tax-credit deadline then slowed in May. | | ■ | Financial activity was little changed, with business loan demand firming in four districts and loan quality stabilizing or improving; permanent employment edged up, and the European fiscal crisis raised uncertainty. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.68 |
| Consumer Discretionary
XLY
▶ Steady | +0.53 |
| Financials
XLF
▲ Turning up | +0.44 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | −0.29 |
| Utilities
XLU
▶ Steady | +0.19 |
| Health Care
XLV
▶ Steady | +0.20 |
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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 | Industrials
XLI | | +0.68 | Favorable | +1.40 | +0.57 | ▶ +0.51 | | 2 | Consumer Discretionary
XLY | | +0.53 | Favorable | +0.82 | +0.58 | ▶ +0.22 | | 3 | Financials
XLF | | +0.44 | Leaning Favorable | +0.60 | +0.01 | ▲ +1.33 | | 4 | Materials
XLB | | +0.39 | Leaning Favorable | +0.42 | +0.50 | ▶ −0.09 | | 5 | Information Technology
XLK | | +0.36 | Leaning Favorable | +0.58 | +0.50 | ▶ −0.09 | | 6 | Energy
XLE | | +0.26 | Leaning Favorable | +0.55 | +0.50 | ▼ −0.12 | | 7 | Consumer Staples
XLP | | +0.25 | Leaning Favorable | +0.31 | +0.50 | ▲ +0.28 | | 8 | Communication Services
XLC | | +0.21 | Leaning Favorable | +0.00 | +0.50 | ▶ +0.00 | | 9 | Health Care
XLV | | +0.20 | Leaning Favorable | +0.09 | +0.50 | ▶ −0.10 | | 10 | Utilities
XLU | | +0.19 | Leaning Favorable | +0.00 | +0.50 | ▶ +0.00 | | 11 | Real Estate
XLRE | | −0.29 | Leaning Unfavorable | −0.55 | −0.47 | ▶ +0.17 |
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 |
Activity improved across all twelve districts at a 'modest' pace. | Permanent employment edging up; temporary-to-permanent transitions; manufacturing workweek longer. | | Inflation Pressure (higher = headwind) | | +0.00 |
Final prices stable; steel, lumber and food up; energy down; supply constraints emerging. | Financial activity little changed; business loan demand firming in four districts; loan quality stabilizing or improving. | Outlooks positive but cautious; European debt crisis and market volatility raise uncertainty. |
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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 | · | +1 | · | · | · | · | · | | FinancialsXLF | · | +1 | +1 | −1 | · | · | +1 | · | · | · | +1 | +1 | | Consumer DiscretionaryXLY | +1 | +1 | +1 | +1 | · | +1 | +1 | +1 | +1 | +1 | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | +1 | +2 | +2 | +1 | +2 | +1 | +1 | +1 | +2 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | +1 | +1 | | EnergyXLE | · | · | · | · | · | −1 | · | · | +1 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | · | −1 | −1 | · | −1 | −1 | · | · | · | · | −1 | | MaterialsXLB | · | · | · | +1 | · | · | +1 | +1 | +1 | · | +1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Cleveland, Chicago, Richmond, Dallas Manufacturing leads; auto, steel and heavy equipment production up. Why it matters: Industrials lead. | Industrials +1 All districts Manufacturing and transportation improved everywhere. Why it matters: Broad Industrials strength. | Consumer Discretionary +1 Most districts Retail and vehicle sales rose; tourism up. Why it matters: Discretionary positive. | Information Technology +1 San Francisco High-tech manufacturing strong. Why it matters: Largest IT weight. | Financials +1 New York, San Francisco, Chicago, Dallas, Philadelphia Business loan demand firming; underwriting stronger. Why it matters: Financials improve. | Real Estate −1 Most districts Commercial real estate weak; vacancies rising. Why it matters: Real Estate lags. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Stable to increasing activity. |
| New York Growing +1.0 Outlook ▲ Strengthened further. |
| Philadelphia Growing +0.5 Outlook ▲ Advanced modestly. |
| Cleveland Growing +1.0 Outlook ▲ Further signs of strengthening. |
| Richmond Growing +1.0 Outlook ▲ Moderate gains; manufacturing a bright spot. |
| Atlanta Growing +0.5 Outlook ▲ Improved modestly. |
| Chicago Growing +0.5 Outlook ▲ Improved but rate slowed in May. |
| St. Louis Growing +0.5 Outlook ▲ Increased modestly. |
| Minneapolis Growing +1.0 Outlook ▲ Grew at a steady pace. |
| Kansas City Growing +0.5 Outlook ▲ Grew modestly. |
| Dallas Growing +1.0 Outlook ▲ Continued to improve. |
| San Francisco Growing +0.5 Outlook ▲ Further modest improvement. |
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Where the signal is thin or split Divergences to watch | Financials Turn Neutral — first non-negative Financials reading since 2007.
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| | Europe — fiscal crisis emerged as a new source of uncertainty.
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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 |