EconomyxAI · Beige Book Sector Monitor November 2007Released November 28, 2007 |
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Conditions index +0.05 avg of 11 sectors, −2 to +2 |
| Outlook index −0.05 sectors with an outlook |
| Districts growing 5/12 per National Summary |
| Positive momentum 2/11 sectors improving |
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This release in brief The read | ■ | Released November 28, 2007, with information collected before mid-November 2007 (date not printed in the PDF). | | ■ | The economy continued to expand from October through mid-November but at a reduced pace; seven districts reported slower activity and the rest modest expansion or mixed conditions. | | ■ | Retail spending was soft and retailers expected a slow holiday season, with early discounting in Richmond, Dallas and San Francisco; tourism expanded further in most districts. | | ■ | Manufacturing was mixed and little changed on net as exports offset housing and auto weakness; the glut of homes kept pressure on prices and construction, and commercial demand began to level off in places. | | ■ | Loan demand slowed with C&I lending flat or down in five districts and mortgage delinquencies up significantly; food and energy pushed some prices higher while wage pressures were unchanged. |
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Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▲ Turning up | +0.81 |
| Health Care
XLV
▲ Turning up | +0.40 |
| Information Technology
XLK
▶ Steady | +0.30 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | −0.68 |
| Financials
XLF
▶ Steady | −0.61 |
| Consumer Discretionary
XLY
▼ Weakening | −0.50 |
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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 | Energy
XLE | | +0.81 | Favorable | +1.12 | +1.00 | ▲ +0.51 | | 2 | Health Care
XLV | | +0.40 | Leaning Favorable | +0.54 | +0.50 | ▲ +0.26 | | 3 | Information Technology
XLK | | +0.30 | Leaning Favorable | +0.51 | +0.50 | ▶ −0.07 | | 4 | Consumer Staples
XLP | | +0.05 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 5 | Communication Services
XLC | | −0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 6 | Utilities
XLU | | −0.02 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 7 | Industrials
XLI | | −0.05 | Neutral | +0.18 | +0.00 | ▶ −0.18 | | 8 | Materials
XLB | | −0.14 | Neutral | −0.26 | +0.00 | ▶ −0.18 | | 9 | Consumer Discretionary
XLY | | −0.50 | Leaning Unfavorable | −0.45 | −0.50 | ▼ −0.52 | | 10 | Financials
XLF | | −0.61 | Unfavorable | −0.51 | −1.00 | ▶ −0.04 | | 11 | Real Estate
XLRE | | −0.68 | Unfavorable | −0.62 | −1.00 | ▶ −0.24 |
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 | | +0.25 |
Expansion continued at a reduced pace; seven districts slower, the rest modest or mixed. | Labor markets relatively tight overall but loosening in some areas; Dallas and San Francisco eased; wage gains 3 to 4 percent. | | Inflation Pressure (higher = headwind) | | −0.75 |
Modest final-price pressure overall but significant for food- and energy-intensive products; weaker dollar lifting import prices. | Slower loan growth; C&I flat or down in five districts; tighter CRE and mortgage standards; mortgage delinquencies up significantly. | Retailers expect a slow holiday season and weaker spending in 2008; no homebuilding pickup until well into next year. |
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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 | | Health CareXLV | +1 | · | · | · | +1 | +1 | · | +1 | · | +1 | · | +1 | | FinancialsXLF | · | −1 | · | −1 | · | −1 | · | · | · | −1 | −1 | · | | Consumer DiscretionaryXLY | · | · | · | −1 | −1 | · | · | −1 | +1 | +1 | −1 | −1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | +1 | · | · | +1 | · | · | −1 | +1 | · | −1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | +1 | +1 | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | · | −1 | · | −1 | −1 | −1 | · | · | · | · | −1 | | MaterialsXLB | · | · | · | · | · | −1 | · | · | +1 | · | · | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy +2 Dallas Texas drilling highest since the 1980s. Why it matters: Largest Energy weight. | Consumer Discretionary −1 San Francisco, Dallas, St. Louis Retail sales downbeat; early discounting. Why it matters: Discretionary drag. | Financials −1 New York, Dallas, Atlanta Weaker loan demand; rising delinquencies. Why it matters: Financials drag. | Real Estate −1 Boston, Richmond, San Francisco Home sales down sharply; glut of homes. Why it matters: Real Estate drag. | Information Technology +1 San Francisco, Chicago IT sales steady; electronics growth "phenomenal." Why it matters: IT positive. | Health Care +1 Boston, Kansas City, San Francisco Biopharma red-hot; health-care hiring strong. Why it matters: Health Care support. |
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Twelve Fed districts District roundup Boston Flat Outlook ▶ Revenue gains, rising caution. |
| New York Growing +0.5 Outlook ▲ Expanded at a more subdued pace. |
| Philadelphia Growing +0.5 Outlook ▲ Expanded modestly. |
| Cleveland Flat Outlook ▶ Growth slowed. |
| Richmond Contracting −0.5 Outlook ▼ Weakened somewhat. |
| Atlanta Flat Outlook ▶ Mixed picture. |
| Chicago Growing +0.5 Outlook ▲ Expanded at a slower pace. |
| St. Louis Flat Outlook ▶ Expanded more slowly. |
| Minneapolis Growing +0.5 Outlook ▲ Grew moderately. |
| Kansas City Growing +0.5 Outlook ▲ Expanded modestly, mixed signals. |
| Dallas Flat Outlook ▶ Decelerated further. |
| San Francisco Flat Outlook ▶ Expanded; further deceleration. |
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Where the signal is thin or split Divergences to watch | Consumer Discretionary — Five -1s, including San Francisco, push Discretionary negative for the first time in this cycle.
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| | Energy — Dallas's +2 lifts weighted Energy to its strongest reading of 2007.
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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 |