EconomyxAI · Sector Watch May 2017Released May 31, 2017 |
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Conditions index +0.39 avg of 11 sectors, −2 to +2 |
| Outlook index +0.28 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 May 31, 2017, with information collected on or before May 22, 2017. | | ■ | Most districts expanded at a modest or moderate pace; Boston and Chicago slowed to modest and New York flattened out. | | ■ | Consumer spending softened with flat nonauto retail and autos edging down; manufacturing and most nonfinancial services grew moderately. | | ■ | Construction and existing home sales grew modestly to moderately; energy improved modestly; labor markets tightened with shortages broadening. |
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Sector prospects Where the 3–12 month view points Strongest prospects Real Estate
XLRE
▶ Steady | +0.52 |
| Materials
XLB
▶ Steady | +0.44 |
| Industrials
XLI
▶ Steady | +0.39 |
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| Weakest prospects Consumer Discretionary
XLY
▼ Weakening | −0.11 |
| Consumer Staples
XLP
▶ Steady | −0.03 |
| 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 | | +0.52 | Favorable | +1.04 | +0.50 | ▶ +0.07 | | 2 | Materials
XLB | | +0.44 | Leaning Favorable | +0.58 | +0.50 | ▶ +0.20 | | 3 | Industrials
XLI | | +0.39 | Leaning Favorable | +0.95 | +0.50 | ▶ +0.03 | | 4 | Financials
XLF | | +0.36 | Leaning Favorable | +0.45 | +0.50 | ▼ −0.04 | | 5 | Information Technology
XLK | | +0.35 | Leaning Favorable | +0.51 | +0.50 | ▶ −0.05 | | 6 | Energy
XLE | | +0.32 | Leaning Favorable | +0.66 | +0.50 | ▼ −0.21 | | 7 | Communication Services
XLC | | +0.04 | Neutral | +0.05 | +0.00 | ▶ +0.05 | | 8 | Health Care
XLV | | +0.01 | Neutral | +0.03 | −0.02 | ▲ +0.01 | | 9 | Utilities
XLU | | −0.01 | Neutral | +0.00 | +0.00 | ▶ −0.07 | | 10 | Consumer Staples
XLP | | −0.03 | Neutral | +0.00 | +0.00 | ▶ −0.11 | | 11 | Consumer Discretionary
XLY | | −0.11 | Neutral | −0.03 | +0.05 | ▼ −0.48 |
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 |
Most districts modest or moderate; Boston and Chicago slowed, New York flat. | Labor markets tightened further with shortages across a broadening range of occupations. | | Inflation Pressure (higher = headwind) | | +0.50 |
Modest price increases; lumber and steel pushing input costs higher. | Lending trends mirrored and supported the general economy. | Most outlooks positive but optimism waned in a few districts. |
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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 | · | · | · | · | · | +2 | +1 | | Consumer DiscretionaryXLY | · | −1 | · | · | +1 | · | · | −1 | · | +1 | · | · | | Communication ServicesXLC | · | · | · | · | +1 | · | · | · | · | · | · | · | | IndustrialsXLI | · | · | +1 | +1 | +2 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | +1 | +1 | · | · | · | +1 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +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 Rapid home price growth; bids well above asking. Why it matters: SF carries large Real Estate weight. | Industrials +2 Richmond Strong growth in new orders and shipments. Why it matters: Largest Industrials read. | Industrials +1 broad−based Broad-based Moderate manufacturing growth in most districts. Why it matters: Industrials positive across nine districts. | Financials +2 Dallas Loans expanded; higher net interest margins. Why it matters: Strong Financials read. | Consumer Discretionary −1 New York Same-store sales below plan; activity flattened. Why it matters: NY weight trims Discretionary. | Information Technology +1 San Francisco, Cleveland, Kansas City Strong business services; software and high-tech sales up. Why it matters: SF carries 47% of IT weight. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Growth modest, slightly less positive. |
| New York Flat Outlook ▲ Activity essentially flat. |
| Philadelphia Growing +0.5 Outlook ▲ Continued at a modest pace. |
| Cleveland Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Richmond Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| 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 ▲ Continued to expand modestly. |
| Minneapolis Growing +0.5 Outlook ▲ Grew modestly overall. |
| Kansas City Growing +1.0 Outlook ▲ Continued to increase moderately. |
| Dallas Growing +1.0 Outlook ▲ Expanded at a moderate 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 — New York's large weight at -1 pulls the weighted score below the unweighted average.
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| | Financials — Dallas +2 offsets flat New York, keeping weighted Financials positive.
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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 |