EconomyxAI · Sector Watch May 2016Released June 1, 2016 |
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Conditions index +0.18 avg of 11 sectors, −2 to +2 |
| Outlook index +0.31 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 June 1, 2016, with information collected on or before May 23, 2016. | | ■ | Mostly modest growth; San Francisco moderate, Chicago and Kansas City slowed, Dallas marginal, New York generally flat. | | ■ | Consumer spending up modestly with mixed reports in four districts; manufacturing mixed with declines in New York, Philadelphia, St. Louis and Kansas City. | | ■ | Construction and real estate expanded, loan demand rose moderately, the energy sector remained weak, and tight labor markets were widely noted. |
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Sector prospects Where the 3–12 month view points Strongest prospects Real Estate
XLRE
▶ Steady | +0.65 |
| Financials
XLF
▶ Steady | +0.42 |
| Information Technology
XLK
▶ Steady | +0.35 |
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| Weakest prospects Consumer Staples
XLP
▼ Turning down | −0.13 |
| Energy
XLE
▲ Improving | −0.12 |
| Utilities
XLU
▶ Steady | +0.01 |
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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 | Real Estate
XLRE | | +0.65 | Favorable | +1.36 | +0.53 | ▶ +0.20 | | 2 | Financials
XLF | | +0.42 | Leaning Favorable | +0.76 | +0.43 | ▶ +0.28 | | 3 | Information Technology
XLK | | +0.35 | Leaning Favorable | +0.51 | +0.50 | ▶ −0.02 | | 4 | Industrials
XLI | | +0.26 | Leaning Favorable | +0.23 | +0.54 | ▼ −0.06 | | 5 | Materials
XLB | | +0.25 | Leaning Favorable | −0.09 | +0.50 | ▶ +0.25 | | 6 | Consumer Discretionary
XLY | | +0.14 | Neutral | +0.19 | +0.45 | ▼ −0.33 | | 7 | Health Care
XLV | | +0.11 | Neutral | −0.01 | +0.50 | ▼ −0.40 | | 8 | Communication Services
XLC | | +0.02 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Utilities
XLU | | +0.01 | Neutral | +0.00 | +0.00 | ▶ −0.01 | | 10 | Energy
XLE | | −0.12 | Neutral | −0.73 | −0.08 | ▲ +0.64 | | 11 | Consumer Staples
XLP | | −0.13 | Neutral | −0.22 | +0.00 | ▼ −0.29 |
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 | | +0.25 |
Mostly modest growth; New York flat, Dallas marginal, Chicago and Kansas City slowed. | Employment grew modestly; tight labor markets widely noted. | | Inflation Pressure (higher = headwind) | | +0.25 |
Price pressure grew slightly; building materials up. | Loan demand up moderately in all but one district; credit quality improved. | Generally optimistic outlooks; oil prices may have bottomed. |
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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 | · | +1 | −1 | | FinancialsXLF | +1 | +1 | +2 | +1 | +1 | +1 | · | +1 | · | · | −1 | +1 | | Consumer DiscretionaryXLY | · | −1 | +1 | · | · | +1 | +1 | +1 | · | · | · | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | −1 | −1 | +1 | +1 | +1 | +1 | −1 | +1 | −1 | · | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | −1 | | EnergyXLE | · | · | · | · | +1 | −1 | · | −1 | −2 | −1 | −1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +2 | +1 | +1 | +2 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +2 | | MaterialsXLB | · | · | −1 | +1 | · | · | +1 | · | · | −1 | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Real Estate +2 San Francisco, Boston, Cleveland Real estate expanding at a robust pace; record closings. Why it matters: Strongest RE reads. | Financials +2 Philadelphia Total loan volumes rose substantially. Why it matters: Financials positive. | Financials +1 broad−based Broad-based Loan demand up moderately in all but one District. Why it matters: Financials broad. | Energy −2 Minneapolis Active rigs at lowest level in more than 10 years. Why it matters: Energy negative. | Industrials −1 New York, Philadelphia, St. Louis, Kansas City Manufacturing activity fell. Why it matters: Industrials mixed. | Consumer Discretionary −1 New York Sales weakened and remained soft. Why it matters: NY weight trims CD. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Generally improving conditions. |
| New York Flat Outlook ▲ Generally flat. |
| Philadelphia Growing +0.5 Outlook ▲ Modest pace of growth. |
| Cleveland Growing +0.5 Outlook ▲ Grew at a modest pace. |
| Richmond Growing +0.5 Outlook ▲ Continued to expand. |
| Atlanta Growing +0.5 Outlook ▲ Continued at a modest pace. |
| Chicago Growing +0.5 Outlook ▶ Slowed to a modest pace. |
| St. Louis Growing +0.5 Outlook ▲ Improve at a modest pace. |
| Minneapolis Growing +0.5 Outlook ▲ Grew modestly. |
| Kansas City Growing +0.5 Outlook ▲ Slightly slower pace. |
| Dallas Growing +0.2 Outlook ▲ Rose marginally. |
| San Francisco Growing +1.0 Outlook ▲ Grew at a moderate pace. |
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Where the signal is thin or split Divergences to watch | Real Estate — Three +2 reads including San Francisco drive the weighted RE score up.
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| | Consumer Discretionary — New York -1 and flat SF hold weighted CD below its 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 |