EconomyxAI · Beige Book Sector Monitor November 1997Released December 3, 1997 · Data through November 24 |
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Conditions index +0.48 avg of 11 sectors, −2 to +2 |
| Outlook index +0.40 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Districts reported a continued moderate pace of growth, with Minneapolis robust and Dallas expanding at a slightly slower rate. | | ■ | Non-auto retail sales improved in most regions with late winter weather and retailers were optimistic about the holidays, but auto sales stayed sluggish with high inventories. | | ■ | Manufacturing ran at high levels with some capacity limits; heavy equipment and steel strengthened in Chicago, Cleveland and Dallas, while Asian turmoil hurt exports and electronics, apparel and textiles weakened. | | ■ | Commercial real estate kept tightening with rising rents, residential markets were mixed but firm, and loan demand was mixed but stronger on balance, led by commercial loans. | | ■ | Labor markets were tight everywhere with wage pressure rising in a few occupations, while goods prices stayed flat as the strong dollar, steady commodity prices and productivity offset wage gains. |
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Sector prospects Where the 3–12 month view points Strongest prospects Real Estate
XLRE
▶ Steady | +0.53 |
| Consumer Discretionary
XLY
▶ Steady | +0.50 |
| Industrials
XLI
▼ Turning down | +0.48 |
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| Weakest prospects Financials
XLF
▼ Weakening | −0.07 |
| Consumer Staples
XLP
▶ Steady | −0.04 |
| Utilities
XLU
▶ Steady | +0.02 |
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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 | | +0.53 | Favorable | +0.88 | −0.38 | ▶ −0.10 | | 2 | Consumer Discretionary
XLY | | +0.50 | Leaning Favorable | +0.68 | +0.83 | ▶ −0.18 | | 3 | Industrials
XLI | | +0.48 | Leaning Favorable | +1.06 | +0.75 | ▼ −0.27 | | 4 | Energy
XLE | | +0.43 | Leaning Favorable | +0.92 | n/a | ▶ −0.15 | | 5 | Communication Services
XLC | | +0.35 | Leaning Favorable | +0.40 | n/a | ▲ +0.20 | | 6 | Materials
XLB | | +0.34 | Leaning Favorable | +0.53 | n/a | ▲ +0.20 | | 7 | Health Care
XLV | | +0.08 | Neutral | +0.07 | n/a | ▶ +0.07 | | 8 | Information Technology
XLK | | +0.03 | Neutral | +0.47 | n/a | ▶ −0.21 | | 9 | Utilities
XLU | | +0.02 | Neutral | +0.00 | n/a | ▶ +0.00 | | 10 | Consumer Staples
XLP | | −0.04 | Neutral | +0.00 | n/a | ▶ −0.11 | | 11 | Financials
XLF | | −0.07 | Neutral | +0.31 | n/a | ▼ −0.37 |
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 | | +1.00 |
Districts reported a continued moderate pace of growth; Minneapolis described robust, broad-based growth and Cleveland a moderate to good pace, while Dallas expanded at a slightly slower rate and San Francisco said shortages, bottlenecks and the strong dollar were beginning to dampen growth. | All regions reported tight labor markets, with shortages of computer workers and engineers and retailers struggling to hire holiday staff; wage pressures increased somewhat but were isolated to a few industries. | | Inflation Pressure (higher = headwind) | | +0.00 |
Price pressures were neutral on balance: steady to declining commodity prices, overseas competition and productivity offset wage gains, with only scattered increases in commercial rents and hotel rates. | Loan demand was mixed but stronger on balance, with commercial lending offsetting softer consumer demand; mortgage rates fell to their lowest since early 1996, sparking refinancing, though New York and St. Louis saw softer demand. | Retailers were generally optimistic about the holidays and San Francisco expects continued strong U.S. performance, but Asian financial turmoil clouded export prospects and Boston manufacturers' 1998 projections were guarded. |
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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 | +1 | · | · | +1 | · | +1 | | Consumer DiscretionaryXLY | +1 | · | · | · | +1 | +1 | · | · | +1 | +1 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | · | +1 | +1 | +2 | +1 | · | +2 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | +1 | −1 | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | +1 | +1 | · | · | +1 | +1 | +1 | · | +2 | +1 | | MaterialsXLB | · | · | · | +1 | · | · | +1 | · | · | · | +1 | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Cleveland, Chicago Industrial activity strengthened considerably; steel heading for a record year. Why it matters: Two +2s and ten positive districts keep Industrials near the top. | Energy +2 Dallas Oil services 'unchanged at extremely high levels'; work rationed to customers. Why it matters: Dallas carries 45% of Energy weight. | Financials −1 New York Weaker demand for mortgages and consumer loans. Why it matters: New York is 28% of Financials; a -1 here outweighs several +1s. | Consumer Discretionary outlook +1 eight districts Retailers expect a strong holiday season. Why it matters: Broad positive outlook lifts the Prospect score. | Real Estate +2 Dallas Residential and commercial real estate activity 'very strong'. Why it matters: Dallas +2 plus broad +1s keep Real Estate firm. | Information Technology −1 Cleveland Semiconductor equipment orders declined substantially on Asian weakness. Why it matters: First negative IT read of the year; Asia risk emerges. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▶ Expanding at a moderate pace; sustainability questioned. |
| New York Growing +1.0 Steady pace of growth; office market tight. |
| Philadelphia Growing +1.0 Improving modestly in November. |
| Cleveland Growing +1.0 Moderate to good pace; manufacturing strengthened. |
| Richmond Growing +1.0 Outlook ▲ Expanding moderately; growth picked up in a few sectors. |
| Atlanta Growing +1.0 Outlook ▲ Expanding moderately; tourism strong. |
| Chicago Growing +1.0 Outlook ▲ Very similar to last report; factories near capacity. |
| St. Louis Growing +1.0 Outlook ▲ Growing at a steady pace; contacts optimistic. |
| Minneapolis Growing +2.0 Outlook ▲ Robust, broad-based growth. |
| Kansas City Growing +1.0 Outlook ▲ Grew moderately with a few signs of easing. |
| Dallas Growing +1.0 Outlook ▲ Expanded at a slightly slower rate. |
| San Francisco Growing +1.0 Outlook ▲ Solid growth; constraints beginning to dampen pace. |
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Where the signal is thin or split Divergences to watch | Industrials — Chicago and Cleveland +2 offset San Francisco easing to +1; the weighted score stays high.
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| | Information Technology — San Francisco +1 (47%) holds weighted IT positive despite Cleveland's -1 and flat electronics elsewhere.
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| | Consumer Discretionary — San Francisco +1 (26%) and a broad holiday outlook lift Discretionary back from October.
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| | Financials — New York -1 at 28% weight pulls weighted Financials well below the unweighted count of eight +1 reads.
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| | CONSUMER STAPLES and UTILITIES: no directional coverage.
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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 |