EconomyxAI · Sector Watch May 2014Released June 4, 2014 |
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Conditions index +0.55 avg of 11 sectors, −2 to +2 |
| Outlook index +0.32 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released June 4, 2014, with information collected on or before May 23, 2014. | | ■ | All twelve districts expanded; moderate in Boston, New York, Richmond, Chicago, Minneapolis, Dallas and San Francisco, modest elsewhere; Cleveland and St. Louis picked up. | | ■ | Consumer spending expanded with robust new vehicle sales and strong tourism; manufacturing expanded in all districts, robustly in Boston, New York, Atlanta and Kansas City. | | ■ | Lending increased in all reporting districts; residential real estate mixed with low inventories; energy strengthened; prices steady to slightly higher. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▲ Improving | +0.71 |
| Financials
XLF
▲ Improving | +0.69 |
| Consumer Discretionary
XLY
▶ Steady | +0.53 |
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| Weakest prospects Health Care
XLV
▶ Steady | −0.07 |
| Communication Services
XLC
▶ Steady | +0.02 |
| Consumer Staples
XLP
▲ Turning up | +0.05 |
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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 | | +0.71 | Favorable | +1.29 | +0.59 | ▲ +0.70 | | 2 | Financials
XLF | | +0.69 | Favorable | +1.33 | +0.50 | ▲ +0.95 | | 3 | Consumer Discretionary
XLY | | +0.53 | Favorable | +0.91 | +0.55 | ▶ +0.57 | | 4 | Information Technology
XLK | | +0.53 | Favorable | +0.69 | +0.77 | ▶ +0.01 | | 5 | Real Estate
XLRE | | +0.42 | Leaning Favorable | +0.63 | +0.62 | ▼ −0.18 | | 6 | Energy
XLE | | +0.42 | Leaning Favorable | +0.84 | +0.53 | ▼ −0.24 | | 7 | Materials
XLB | | +0.20 | Leaning Favorable | +0.21 | +0.00 | ▶ +0.33 | | 8 | Utilities
XLU | | +0.07 | Neutral | +0.21 | +0.00 | ▶ +0.00 | | 9 | Consumer Staples
XLP | | +0.05 | Neutral | +0.05 | +0.00 | ▲ +0.15 | | 10 | Communication Services
XLC | | +0.02 | Neutral | +0.02 | +0.00 | ▶ −0.06 | | 11 | Health Care
XLV | | −0.07 | Neutral | −0.15 | +0.00 | ▶ −0.19 |
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 |
All twelve districts expanded; moderate in seven, pickup in Cleveland and St. Louis. | Labor market conditions generally strengthened; hiring steady to stronger. | | Inflation Pressure (higher = headwind) | | +0.00 |
Prices mostly steady to up slightly; food prices higher. | Lending activity increased throughout; credit quality improved. | Outlooks positive; auto dealers 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 | +2 | · | · | +1 | · | · | +1 | · | · | +1 | · | +1 | | Health CareXLV | −1 | · | · | · | −1 | · | · | · | · | · | · | · | | FinancialsXLF | · | +2 | +1 | +1 | +1 | +1 | +1 | +1 | · | +1 | +1 | +2 | | Consumer DiscretionaryXLY | +1 | +1 | +2 | +1 | +1 | +1 | · | · | +1 | +1 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | +1 | · | · | · | · | | IndustrialsXLI | +2 | +2 | +1 | +1 | +1 | +2 | +1 | +1 | +1 | +2 | +1 | +1 | | Consumer StaplesXLP | +1 | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | +1 | · | +1 | +1 | +1 | +1 | · | +1 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | +1 | | Real EstateXLRE | · | +1 | −1 | +1 | +1 | +1 | +1 | −1 | · | +1 | +2 | · | | MaterialsXLB | · | · | · | +1 | −1 | · | · | · | +1 | · | +1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Financials +2 New York, San Francisco Loan demand strong; lending increased in all reporting districts. Why it matters: Heaviest Financials weights both at +2. | Industrials +2 Boston, New York, Atlanta, Kansas City Manufacturing expanded robustly. Why it matters: Four strong Industrials reads. | Information Technology +2 Boston Software and IT revenue up 5 to 20 percent. Why it matters: Strong IT read. | Information Technology +1 San Francisco Healthy tech services; semiconductors improved modestly. Why it matters: SF carries 47% of IT weight. | Consumer Discretionary +2 Philadelphia Phenomenal April auto sales. Why it matters: Strong Discretionary read. | Consumer Discretionary +1 broad−based Broad-based Robust new vehicle sales and strong tourism. Why it matters: Discretionary positive. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Continues to increase. |
| New York Growing +1.0 Outlook ▲ Grow at a moderate pace. |
| Philadelphia Growing +0.5 Outlook ▲ Grew at a modest pace. |
| Cleveland Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| Richmond Growing +1.0 Outlook ▲ Expanded moderately. |
| Atlanta Growing +0.5 Outlook ▲ Improving modestly. |
| Chicago Growing +1.0 Outlook ▲ Moderate growth. |
| St. Louis Growing +0.5 Outlook ▲ Grown modestly. |
| Minneapolis Growing +1.0 Outlook ▲ Moderate pace. |
| Kansas City Growing +0.5 Outlook ▲ Expanded modestly. |
| Dallas Growing +1.0 Outlook ▲ Moderate pace. |
| San Francisco Growing +1.0 Outlook ▲ Improve moderately. |
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Where the signal is thin or split Divergences to watch | Financials — New York and San Francisco (+2) carry most of the Financials weight, lifting the weighted score.
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| | Information Technology — Boston (+2) and SF (+1) push weighted IT well above the unweighted average.
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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 |