EconomyxAI · Sector Watch May 2018Released May 30, 2018 |
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Conditions index +0.44 avg of 11 sectors, −2 to +2 |
| Outlook index +0.32 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 30, 2018, with information collected on or before May 21, 2018. | | ■ | Activity expanded moderately with few shifts in the pattern of growth; Dallas sped up to a solid pace. | | ■ | Manufacturing shifted into higher gear, with over half the districts reporting a pickup and a third calling activity strong; freight volumes rose. | | ■ | Consumer spending was soft with nonauto retail moderating and autos flat; loan demand ticked higher; homebuilding and sales rose modestly; trade policy uncertainty noted. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▲ Turning up | +0.68 |
| Materials
XLB
▶ Steady | +0.48 |
| Real Estate
XLRE
▶ Steady | +0.43 |
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| Weakest prospects Health Care
XLV
▶ Steady | −0.04 |
| Consumer Staples
XLP
▶ Steady | −0.01 |
| Communication Services
XLC
▶ Steady | −0.00 |
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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 | +1.39 | +0.49 | ▲ +0.41 | | 2 | Materials
XLB | | +0.48 | Leaning Favorable | +0.51 | +0.50 | ▶ +0.20 | | 3 | Real Estate
XLRE | | +0.43 | Leaning Favorable | +0.79 | +0.50 | ▶ −0.05 | | 4 | Energy
XLE | | +0.38 | Leaning Favorable | +0.67 | +0.50 | ▼ −0.21 | | 5 | Information Technology
XLK | | +0.37 | Leaning Favorable | +0.56 | +0.50 | ▶ −0.01 | | 6 | Consumer Discretionary
XLY | | +0.33 | Leaning Favorable | +0.45 | +0.53 | ▶ +0.28 | | 7 | Financials
XLF | | +0.32 | Leaning Favorable | +0.54 | +0.48 | ▶ +0.14 | | 8 | Utilities
XLU | | +0.03 | Neutral | +0.00 | +0.00 | ▶ +0.10 | | 9 | Communication Services
XLC | | −0.00 | Neutral | −0.05 | +0.00 | ▶ −0.05 | | 10 | Consumer Staples
XLP | | −0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Health Care
XLV | | −0.04 | Neutral | −0.07 | +0.00 | ▶ −0.10 |
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 |
Moderate expansion; manufacturing in higher gear; Dallas solid. | Employment rose modestly to moderately; tight labor; wage gains modest in aggregate. | | Inflation Pressure (higher = headwind) | | +0.75 |
Prices rose moderately in most districts; steel, aluminum, oil and lumber costs up. | Loan demand ticked higher; deposit rates rising on competition. | Near-term outlooks generally upbeat despite trade 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 | | Health CareXLV | · | · | · | · | −1 | · | · | · | · | · | · | · | | FinancialsXLF | · | +1 | · | +1 | · | +1 | +1 | −1 | · | · | +1 | · | | Consumer DiscretionaryXLY | +1 | +1 | +1 | −1 | +1 | +1 | +1 | · | · | +1 | · | · | | Communication ServicesXLC | · | · | · | · | −1 | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | +1 | +1 | +2 | +1 | +2 | · | +2 | +2 | +2 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | +1 | +1 | · | −1 | +1 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | · | · | +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 Industrials +2 Chicago, Minneapolis, Kansas City Manufacturing increased strongly or robustly. Why it matters: Strong Industrials reads. | Industrials +2 Dallas, Richmond Manufacturing accelerated; trucking and rail near records. Why it matters: Strong Industrials reads. | Real Estate +2 San Francisco Real estate activity expanded at a robust pace. Why it matters: SF carries large Real Estate weight. | Information Technology +1 San Francisco Brisk semiconductor sales. Why it matters: SF carries 47% of IT weight. | Energy +1 Dallas, Kansas City, Atlanta Energy expansion; record drilling permits; surging exports. Why it matters: Energy positive with Dallas weight. | Financials +1 New York, Chicago, Dallas Higher loan demand. Why it matters: Financials positive. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| New York Growing +0.5 Outlook ▲ Continued to grow modestly. |
| Philadelphia Growing +0.5 Outlook ▲ Continued at a modest pace. |
| Cleveland Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Richmond Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Atlanta Growing +0.5 Outlook ▲ Continued at a modest pace. |
| Chicago Growing +1.0 Outlook ▲ Remained at a moderate pace. |
| St. Louis Flat Outlook ▶ Improved slightly. |
| Minneapolis Growing +1.0 Outlook ▲ Grew moderately. |
| Kansas City Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Dallas Growing +1.5 Outlook ▲ Expanded at a solid 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 | Industrials — Five +2 reads including Chicago and Dallas push weighted Industrials well above +1.
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| | Real Estate — San Francisco +2 carries a largely flat Real Estate matrix.
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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 |