EconomyxAI · Sector Watch November 2008Released December 3, 2008 |
| |
Conditions index −0.99 avg of 11 sectors, −2 to +2 |
| Outlook index −1.08 sectors with an outlook |
| Districts growing 0/12 per National Summary |
| Positive momentum 1/11 sectors improving |
|
|
This release in brief The read | ■ | Released December 3, 2008, with information collected before November 24, 2008. | | ■ | Overall economic activity weakened across all districts; New York said its economy 'deteriorated substantially,' and Cleveland, Dallas and San Francisco described marked or decided weakening. | | ■ | Retail sales fell, vehicle sales were down significantly with buyers struggling to obtain financing, and retailers prepared for a slow holiday season with heavy discounting. | | ■ | All 12 districts reported weaker manufacturing, with exports falling almost everywhere; commercial real estate weakened broadly, and energy and mining began to soften as prices dropped. | | ■ | Lending contracted and standards rose nationwide, though Chicago saw FDIC and Federal Reserve actions improve liquidity; price pressures eased as energy and raw materials fell. |
|
Sector prospects Where the 3–12 month view points Strongest prospects Consumer Staples
XLP
▶ Steady | −0.28 |
| Health Care
XLV
▶ Steady | −0.35 |
| Utilities
XLU
▶ Steady | −0.43 |
|
|
| Weakest prospects Consumer Discretionary
XLY
▼ Weakening | −1.43 |
| Information Technology
XLK
▼ Weakening | −1.37 |
| Industrials
XLI
▼ Weakening | −1.36 |
|
|
|
|
All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
|---|
| 1 | Consumer Staples
XLP | | −0.28 | Leaning Unfavorable | +0.36 | −1.00 | ▶ −0.09 | | 2 | Health Care
XLV | | −0.35 | Leaning Unfavorable | +0.10 | −1.00 | ▶ +0.20 | | 3 | Utilities
XLU | | −0.43 | Leaning Unfavorable | +0.00 | −1.00 | ▶ +0.00 | | 4 | Communication Services
XLC | | −0.51 | Unfavorable | −0.10 | −1.00 | ▶ −0.03 | | 5 | Real Estate
XLRE | | −1.01 | Unfavorable | −1.65 | −1.00 | ▶ −0.20 | | 6 | Energy
XLE | | −1.02 | Unfavorable | −0.87 | −1.00 | ▼ −1.76 | | 7 | Materials
XLB | | −1.10 | Unfavorable | −1.23 | −1.00 | ▼ −1.24 | | 8 | Financials
XLF | | −1.19 | Unfavorable | −1.90 | −0.92 | ▶ −0.66 | | 9 | Industrials
XLI | | −1.36 | Unfavorable | −1.90 | −1.44 | ▼ −1.29 | | 10 | Information Technology
XLK | | −1.37 | Unfavorable | −1.79 | −1.00 | ▼ −1.68 | | 11 | Consumer Discretionary
XLY | | −1.43 | Unfavorable | −1.92 | −1.50 | ▼ −0.62 |
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 | | −2.00 |
Activity weakened across all districts; New York deteriorated substantially; San Francisco weakened decidedly. | Labor markets weakening; layoffs accelerated in Atlanta; manufacturing job cuts pronounced in Dallas. | | Inflation Pressure (higher = headwind) | | +0.50 |
Price pressures easing as energy, fuel, raw materials and food prices declined; widespread discounting. | Lending contracted; standards rose nationwide; delinquencies up; some liquidity improvement from FDIC and Fed actions. | Almost all contacts concerned about the near-term outlook; improvement seen four to twelve months away. |
|
Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
|---|
| Information TechnologyXLK | −1 | −2 | −1 | −1 | −2 | −1 | −2 | −1 | −2 | −1 | −2 | −2 | | Health CareXLV | · | · | · | · | · | +1 | · | · | · | · | · | · | | FinancialsXLF | −2 | −2 | −1 | −1 | −2 | −2 | −2 | −2 | −2 | −2 | −2 | −2 | | Consumer DiscretionaryXLY | −1 | −2 | −1 | −2 | −2 | −2 | −2 | −2 | −2 | −2 | −2 | −2 | | Communication ServicesXLC | · | −1 | · | · | +1 | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | −2 | −2 | −2 | −2 | −2 | −2 | −1 | −2 | −2 | −2 | −2 | | Consumer StaplesXLP | · | · | · | · | · | · | · | +1 | · | · | +1 | +1 | | EnergyXLE | · | · | · | · | · | −1 | · | · | −1 | −1 | −1 | −1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | −2 | −1 | −1 | −1 | −2 | −2 | −1 | −1 | −2 | −1 | −2 | | MaterialsXLB | −1 | −1 | −1 | −2 | −1 | −1 | −2 | −1 | −2 | −1 | −1 | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
|
Top highlights What moved the scores Financials −2 New York, San Francisco, Chicago and most districts Lending contracted; standards rose nationwide. Why it matters: Broad -2 drives Financials to the bottom. | Consumer Discretionary −2 San Francisco Unusually weak seasonal demand. Why it matters: Largest Discretionary weight. | Industrials −2 All 12 districts Weaker manufacturing everywhere; exports down. Why it matters: Industrials broad collapse. | Information Technology −2 San Francisco Demand for services continued to fall; manufacturing slowed. Why it matters: Largest IT weight at -2. | Real Estate −2 New York Real estate softened substantially, notably Manhattan. Why it matters: Large weight deepens Real Estate. | Consumer Discretionary −2 New York Tourism declined sharply; weak October sales. Why it matters: Discretionary lower. |
|
Twelve Fed districts District roundup Boston Contracting −1.5 Outlook ▼ Slowed further; temp firms saw marked falloff. |
| New York Contracting −2.0 Outlook ▼ Deteriorated substantially; tourism down sharply. |
| Philadelphia Contracting −1.0 Outlook ▼ Generally weak; loan volume up. |
| Cleveland Contracting −2.0 Outlook ▼ Weakened markedly; steel shipments falling. |
| Richmond Contracting −1.5 Outlook ▼ Weakened; exports declined. |
| Atlanta Contracting −1.5 Outlook ▼ Weakened further; holiday expectations bleak. |
| Chicago Contracting −1.5 Outlook ▼ Declined; concern over length of downturn. |
| St. Louis Contracting −1.5 Outlook ▼ Continued to weaken; manufacturing declines significant. |
| Minneapolis Contracting −1.5 Outlook ▼ Contracted; electronics same-store sales down 8 percent. |
| Kansas City Contracting −1.5 Outlook ▼ Weakened; consumer spending slowed sharply. |
| Dallas Contracting −2.0 Outlook ▼ Broad-based weakening; manufacturing sharp reduction. |
| San Francisco Contracting −2.0 Outlook ▼ Weakened decidedly; credit sharply restricted. |
|
|
Where the signal is thin or split Divergences to watch | Financials — liquidity improved slightly from FDIC and Fed actions, but lending kept contracting.
|
| | Energy — turned negative as oil prices fell; Inflation Pressure macro turned positive for the first time in years.
|
|
|
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 |