EconomyxAI · Sector Watch November 2004Released December 1, 2004 |
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Conditions index +0.35 avg of 11 sectors, −2 to +2 |
| Outlook index +0.22 sectors with an outlook |
| Districts growing 11/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released December 1, 2004, with information collected before November 22, 2004. | | ■ | Growth continued from mid-October to mid-November: eleven districts expanded, New York, Philadelphia, Atlanta and Dallas said the pace picked up, and only Cleveland reported little change. | | ■ | Consumer spending was uneven, with premium goods outselling lower-priced lines; auto sales were flat to down and dealer inventories high. | | ■ | Manufacturing and services increased across the country; heavy truck orders were 'at extremely strong levels' in Chicago, while semiconductors softened in Boston and San Francisco. | | ■ | Commercial real estate appeared to be turning the corner in several districts; business lending firmed and securities activity picked up; cost pressures rose with more pass-through. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.66 |
| | Financials
XLF
▲ Turning up | +0.49 |
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| Weakest prospects Information Technology
XLK
▼ Weakening | −0.30 |
| Communication Services
XLC
▼ Turning down | −0.07 |
| Health Care
XLV
▶ 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 | Industrials
XLI | | +0.66 | Favorable | +0.83 | +0.90 | ▶ +0.03 | | 2 | Energy
XLE | | +0.59 | Favorable | +0.81 | +0.50 | ▶ +0.38 | | 3 | Financials
XLF | | +0.49 | Leaning Favorable | +0.62 | +0.50 | ▲ +0.38 | | 4 | Materials
XLB | | +0.36 | Leaning Favorable | +0.80 | +0.00 | ▶ +0.10 | | 5 | Consumer Discretionary
XLY | | +0.34 | Leaning Favorable | +0.46 | +0.50 | ▶ +0.32 | | 6 | Real Estate
XLRE | | +0.16 | Leaning Favorable | +0.58 | +0.05 | ▶ +0.12 | | 7 | Utilities
XLU | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 8 | Consumer Staples
XLP | | −0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Health Care
XLV | | −0.02 | Neutral | +0.08 | +0.00 | ▶ −0.22 | | 10 | Communication Services
XLC | | −0.07 | Neutral | +0.00 | +0.00 | ▼ −0.40 | | 11 | Information Technology
XLK | | −0.30 | Leaning Unfavorable | −0.33 | −0.04 | ▼ −0.65 |
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 |
Eleven districts expanding, five with a faster pace; only Cleveland little changed. | Labor markets continued to improve with numerous reports of hiring; shortages in specific occupations. | | Inflation Pressure (higher = headwind) | | +0.75 |
Increased cost pressures for energy, transportation, food and petroleum products; customers more tolerant of price increases; retail prices little changed. | Business lending firming; mortgage and refinancing softened further; credit quality unchanged or improved. | Record crops expected; drilling could rise 10 to 20 percent absent constraints; nonresidential turning the corner. |
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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 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | +1 | · | · | +1 | +2 | +1 | +1 | +1 | +1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | +1 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | +1 | · | −1 | +1 | +1 | · | · | +1 | · | · | +1 | | MaterialsXLB | · | · | +1 | · | · | +1 | +1 | · | +1 | · | +2 | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Chicago Heavy truck orders at extremely strong levels. Why it matters: High Industrials weight. | Information Technology −1 San Francisco Semiconductor orders flat; price declines accelerating. Why it matters: Largest IT weight. | Materials +2 Dallas Chemical demand extremely strong. Why it matters: Materials strength. | Industrials +1 broad−based Broad-based Manufacturing up in nine districts. Why it matters: Broad Industrials strength. | Financials +1 New York Securities activity picked up noticeably. Why it matters: Largest Financials weight. | Consumer Discretionary +1 Broad-based Retail solid in five districts; tourism vigorous in San Francisco. Why it matters: Discretionary positive. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Continues to expand. |
| New York Growing +1.0 Outlook ▲ Somewhat firmer tone. |
| Philadelphia Growing +1.0 Outlook ▲ Improved moderately. |
| Cleveland Flat Outlook ▶ Expanded little. |
| Richmond Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| Atlanta Growing +1.0 Outlook ▲ Pace increased. |
| Chicago Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| St. Louis Growing +0.5 Outlook ▲ Expanded modestly. |
| Minneapolis Growing +1.5 Outlook ▲ Broad-based growth. |
| Kansas City Growing +1.0 Outlook ▲ Expanded moderately. |
| Dallas Growing +1.0 Outlook ▲ Accelerated slightly. |
| San Francisco Growing +1.5 Outlook ▲ Expanded solidly. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco's -1 carries the largest IT weight, turning the weighted score negative even though more districts are positive.
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| | Materials — Dallas's +2 in chemicals adds to broad +1 readings for one of the strongest Materials releases of the year.
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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 |