EconomyxAI · Sector Watch November 1998Released December 9, 1998 · Data through December 1 |
| |
Conditions index +0.10 avg of 11 sectors, −2 to +2 |
| Outlook index −0.14 sectors with an outlook |
| Districts growing 10/12 per National Summary |
| Positive momentum 3/11 sectors improving |
|
|
This release in brief The read | ■ | All twelve district economies continued to expand despite contraction in export industries. | | ■ | Growth slowed in Atlanta, Boston, Dallas, Kansas City and St. Louis, held steady in Chicago, Minneapolis, Richmond and San Francisco, and strengthened in New York. | | ■ | Construction increased overall as lower rates and stronger confidence spurred homebuilding, refinancing and a rebound in commercial construction in some areas. | | ■ | Manufacturing generally softened on export declines, with steel, paper, lumber, agricultural equipment and energy equipment cutting output. | | ■ | Oil fell below $12, its lowest nominal level in more than a decade, and Texas drilling was down 38% from a year earlier; goods prices were steady or falling. |
|
Sector prospects Where the 3–12 month view points Strongest prospects Real Estate
XLRE
▲ Turning up | +0.74 |
| Financials
XLF
▲ Turning up | +0.44 |
| Consumer Discretionary
XLY
▶ Steady | +0.25 |
|
|
| Weakest prospects | Materials
XLB
▶ Steady | −0.32 |
| Information Technology
XLK
▼ Turning down | −0.18 |
|
|
|
|
All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
|---|
| 1 | Real Estate
XLRE | | +0.74 | Favorable | +1.23 | +0.61 | ▲ +0.15 | | 2 | Financials
XLF | | +0.44 | Leaning Favorable | +0.69 | n/a | ▲ +0.61 | | 3 | Consumer Discretionary
XLY | | +0.25 | Leaning Favorable | +0.74 | +0.14 | ▶ +0.01 | | 4 | Communication Services
XLC | | +0.19 | Leaning Favorable | +0.40 | n/a | ▶ −0.04 | | 5 | Health Care
XLV | | +0.06 | Neutral | +0.00 | n/a | ▶ −0.10 | | 6 | Utilities
XLU | | +0.02 | Neutral | +0.00 | n/a | ▶ +0.00 | | 7 | Industrials
XLI | | −0.02 | Neutral | +0.03 | −0.07 | ▶ −0.02 | | 8 | Consumer Staples
XLP | | −0.03 | Neutral | +0.00 | n/a | ▶ −0.11 | | 9 | Information Technology
XLK | | −0.18 | Leaning Unfavorable | −0.37 | +0.00 | ▼ −0.04 | | 10 | Materials
XLB | | −0.32 | Leaning Unfavorable | −0.52 | −0.50 | ▶ −0.05 | | 11 | Energy
XLE | | −0.81 | Unfavorable | −1.06 | −1.00 | ▶ −0.05 |
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 |
All twelve districts expanded; growth slowed in five, held steady in four and strengthened in New York, with construction rising and manufacturing softer. | Labor markets stayed tight in nearly all districts, but wage pressures subsided somewhat and San Francisco manufacturers no longer reported difficulty finding skilled workers. | | Inflation Pressure (higher = headwind) | | −0.50 |
Goods prices steady or falling almost everywhere, with lumber, paper, petrochemicals, steel and parts all down and oil at its lowest nominal level in over a decade; only construction materials and some real estate rose. | Low rates stimulated loan demand in most districts, strong in Chicago, New York, Richmond, St. Louis and San Francisco, though bankers generally tightened standards and terms. | San Francisco's outlook improved, Philadelphia saw further modest growth, and Chicago builders were buoyed by rate cuts; but Kansas City manufacturers were substantially less optimistic and Boston expects markedly slower 1999 growth. |
|
Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
|---|
| Information TechnologyXLK | · | · | · | · | · | · | · | · | · | · | +1 | −1 | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | +1 | +1 | · | · | +1 | · | +1 | +1 | · | · | · | +1 | | Consumer DiscretionaryXLY | +1 | +1 | +1 | · | +1 | · | +1 | +1 | +2 | +1 | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | · | +1 | −1 | · | +1 | · | +1 | +1 | +1 | · | −1 | −1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | −1 | · | · | · | −1 | −2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +2 | +1 | +1 | +1 | +1 | +2 | +1 | +2 | +1 | +1 | +1 | | MaterialsXLB | · | · | · | −1 | · | −1 | −1 | −1 | −1 | · | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
|
Top highlights What moved the scores Energy −2 Dallas Drilling 'continued to plummet'; Texas down 38%, Midland-Odessa down 50-60%. Why it matters: Dallas carries the largest Energy weight, so Energy stays at the bottom. | Real Estate +2 New York Housing permits surged 58%; Manhattan office rents rising at a double-digit pace. Why it matters: New York is a heavy Real Estate district; moving to +2 lifts the weighted score. | Information Technology −1 San Francisco Manufacturing slowed further on inventory imbalances in high-tech. Why it matters: San Francisco is about 47% of IT; its -1 turns IT negative again. | Real Estate +1 broad−based All districts Overall, construction activity increased in November. Why it matters: Every district at +1 or better makes Real Estate the strongest sector. | Financials +1 New York, Chicago, Richmond, St. Louis, San Francisco Loan demand strong or increasing on low rates. Why it matters: New York returning to +1 swings weighted Financials positive. | Consumer Discretionary +2 Minneapolis Consumers 'spending at record levels' in urban areas. Why it matters: The only +2 in Discretionary amid broadly modest retail reads. |
|
Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▼ Expanding, but slower than first half. |
| New York Growing +1.0 Mixed but stronger than last report. |
| Philadelphia Growing +1.0 Outlook ▲ Healthy conditions; manufacturing weak. |
| Cleveland Growing +1.0 Mixed growth; construction very strong. |
| Richmond Growing +1.0 Outlook ▲ Continued to expand at a moderate pace. |
| Atlanta Flat Outlook ▲ Weakened again slightly; outlook positive. |
| Chicago Growing +1.0 Outlook ▲ Remained strong with pockets of softness. |
| St. Louis Growing +1.0 Outlook ▲ Some moderation in growth. |
| Minneapolis Growing +2.0 Outlook ▲ Economy displays great strength. |
| Kansas City Growing +1.0 Outlook ▶ Grew moderately; signs of easing present. |
| Dallas Flat Outlook ▼ Growth continued to gradually cool. |
| San Francisco Growing +1.0 Outlook ▼ Moderate pace of growth. |
|
|
Where the signal is thin or split Divergences to watch | Real Estate — all twelve districts +1 or +2, the broadest positive reading of 1998.
|
| | Energy — Dallas -2 with Kansas City and Atlanta -1 keeps Energy the weakest sector; weighted well below unweighted.
|
| | Information Technology — San Francisco -1 outweighs Dallas +1 because San Francisco carries far more IT weight.
|
| | Materials — six districts negative but none at -2, a slight improvement from October.
|
| | UTILITIES, HEALTH CARE and CONSUMER STAPLES: no directional coverage.
|
|
|
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 |