EconomyxAI · Sector Watch May 2011Released June 8, 2011 |
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Conditions index +0.31 avg of 11 sectors, −2 to +2 |
| Outlook index +0.50 sectors with an outlook |
| Districts growing 11/12 per National Summary |
| Positive momentum 5/11 sectors improving |
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This release in brief The read | ■ | Released June 8, 2011, with information collected on or before May 27, 2011. | | ■ | Activity generally continued to expand, but New York, Philadelphia, Atlanta and Chicago noted slower growth while Dallas said its economy accelerated. | | ■ | Manufacturing kept growing at a slower pace, with Japan-related supply disruptions cutting auto output; IT and professional services led nonfinancial services. | | ■ | Consumer spending was mixed as high food and energy prices and bad weather weighed; housing stayed weak except rentals, and commercial leasing was stable. | | ■ | Loan demand was steady to stronger with improving credit quality, energy activity stayed robust, and input costs kept rising with limited pass-through. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Information Technology
XLK
▶ Steady | +0.44 |
| Financials
XLF
▲ Turning up | +0.29 |
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| Weakest prospects Consumer Staples
XLP
▼ Turning down | +0.03 |
| Consumer Discretionary
XLY
▼ Weakening | +0.03 |
| Real Estate
XLRE
▶ Steady | +0.06 |
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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 | | +0.75 | Favorable | +1.36 | +0.78 | ▶ +0.28 | | 2 | Information Technology
XLK | | +0.44 | Leaning Favorable | +0.71 | +0.50 | ▶ +0.12 | | 3 | Financials
XLF | | +0.29 | Leaning Favorable | +0.43 | +0.52 | ▲ +0.12 | | 4 | Materials
XLB | | +0.27 | Leaning Favorable | +0.14 | +0.50 | ▼ −0.35 | | 5 | Industrials
XLI | | +0.27 | Leaning Favorable | +0.72 | +0.62 | ▼ −0.47 | | 6 | Health Care
XLV | | +0.24 | Leaning Favorable | +0.08 | +0.54 | ▶ +0.03 | | 7 | Communication Services
XLC | | +0.20 | Leaning Favorable | +0.00 | +0.50 | ▶ −0.03 | | 8 | Utilities
XLU | | +0.20 | Leaning Favorable | +0.00 | +0.50 | ▶ +0.00 | | 9 | Real Estate
XLRE | | +0.06 | Neutral | −0.32 | +0.25 | ▶ +0.14 | | 10 | Consumer Discretionary
XLY | | +0.03 | Neutral | +0.19 | +0.34 | ▼ −0.51 | | 11 | Consumer Staples
XLP | | +0.03 | Neutral | +0.05 | +0.50 | ▼ −0.26 |
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 | | +0.50 |
Expansion continued but slowed in New York, Philadelphia, Atlanta and Chicago; Dallas accelerated. | Gradual improvement; shortages of specialized technical workers. | | Inflation Pressure (higher = headwind) | | +1.00 |
Widespread commodity price increases; food and energy prices escalating; fuel surcharges. | Loan demand steady to stronger, especially C&I; credit quality improving; standards a bit easier. | Manufacturers optimistic but less so than last report; optimism about second-half real estate. |
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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 | +1 | +1 | +1 | | Health CareXLV | +1 | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | +1 | · | · | +1 | +1 | · | +1 | · | · | · | · | +1 | | Consumer DiscretionaryXLY | −1 | · | +1 | +1 | −1 | · | · | · | +1 | +1 | +1 | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | · | +1 | · | −1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | +1 | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +2 | +2 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | −1 | · | · | · | −1 | · | −1 | −1 | · | · | · | | MaterialsXLB | · | · | +1 | · | · | · | −1 | · | +1 | · | +1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy +2 Dallas Economy accelerated; Permian and Eagle Ford activity strong. Why it matters: Dallas carries 45% of Energy weight. | Energy +2 Kansas City Energy activity continued to expand strongly. Why it matters: Second-largest Energy contributor this round. | Information Technology +1 San Francisco, Boston, Dallas Semiconductor growth strong; orders up from industrial, medical and auto. Why it matters: SF holds 47% of IT weight. | Industrials −1 Richmond Manufacturing cooled; demand leveled off. Why it matters: Lone negative in Industrials. | Industrials +1 broad−based Most districts Manufacturing increased in all but two districts, though more slowly. Why it matters: Keeps Industrials positive. | Consumer Discretionary −1 Boston, Richmond Retail sales mixed but generally down; Richmond sales slowed. Why it matters: Drags Discretionary as food and fuel prices weigh. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Improving conditions; manufacturers strongest. |
| New York Growing +0.5 Outlook ▲ Expanded at a somewhat diminished pace. |
| Philadelphia Growing +0.5 Outlook ▲ Improved overall but softened. |
| Cleveland Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| Richmond Flat Outlook ▶ Increasingly mixed signals. |
| Atlanta Growing +0.5 Outlook ▲ Moderated somewhat. |
| Chicago Growing +0.5 Outlook ▲ Expanded more slowly. |
| St. Louis Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Minneapolis Growing +1.0 Outlook ▲ Grew steadily. |
| Kansas City Growing +1.0 Outlook ▲ Growth remained solid. |
| Dallas Growing +1.0 Outlook ▲ Expanded at an accelerated pace. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
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Where the signal is thin or split Divergences to watch | Consumer Discretionary — deceleration in high-weight districts (San Francisco, New York, Atlanta) leaves the weighted score below the unweighted average.
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| | Energy — two +2 reads in Dallas and Kansas City make Energy the strongest sector.
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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 |