EconomyxAI · Sector Watch November 2009Released December 2, 2009 |
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Conditions index +0.14 avg of 11 sectors, −2 to +2 |
| Outlook index +0.29 sectors with an outlook |
| Districts growing 8/12 per National Summary |
| Positive momentum 7/11 sectors improving |
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This release in brief The read | ■ | Released December 2, 2009, with information collected before November 20, 2009. | | ■ | Economic conditions generally improved modestly; eight districts reported some pickup while Philadelphia, Cleveland, Richmond and Atlanta said conditions were little changed or mixed. | | ■ | Consumer spending picked up moderately for both general merchandise and vehicles, used autos sold relatively well, and retailers held lean inventories going into the holidays. | | ■ | Manufacturing was steady to moderately improving in most districts and services strengthened somewhat; home sales rose in nine districts, while commercial real estate stayed very weak, 'bleak' in Boston and 'distressed' in Kansas City. | | ■ | Loan demand was steady to weaker with tight standards and steady or deteriorating quality; labor markets stayed weak but showed signs of stabilization, and price pressures were limited to commodities. |
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Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▲ Turning up | +0.64 |
| Consumer Discretionary
XLY
▲ Turning up | +0.58 |
| Information Technology
XLK
▶ Steady | +0.42 |
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| Weakest prospects Real Estate
XLRE
▲ Turning up | −0.53 |
| Financials
XLF
▶ Steady | −0.43 |
| Utilities
XLU
▶ Steady | +0.18 |
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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 | | +0.64 | Favorable | +0.90 | +0.50 | ▲ +0.88 | | 2 | Consumer Discretionary
XLY | | +0.58 | Favorable | +0.59 | +0.53 | ▲ +0.99 | | 3 | Information Technology
XLK | | +0.42 | Leaning Favorable | +0.68 | +0.50 | ▶ +0.08 | | 4 | Materials
XLB | | +0.29 | Leaning Favorable | +0.16 | +0.50 | ▶ +0.01 | | 5 | Health Care
XLV | | +0.26 | Leaning Favorable | +0.15 | +0.50 | ▶ +0.12 | | 6 | Industrials
XLI | | +0.24 | Leaning Favorable | +0.32 | +0.66 | ▶ −0.15 | | 7 | Consumer Staples
XLP | | +0.23 | Leaning Favorable | +0.05 | +0.50 | ▶ +0.01 | | 8 | Communication Services
XLC | | +0.19 | Leaning Favorable | +0.00 | +0.50 | ▶ −0.03 | | 9 | Utilities
XLU | | +0.18 | Leaning Favorable | +0.00 | +0.50 | ▶ +0.00 | | 10 | Financials
XLF | | −0.43 | Leaning Unfavorable | −0.78 | −0.50 | ▶ −0.03 | | 11 | Real Estate
XLRE | | −0.53 | Unfavorable | −0.53 | −1.00 | ▲ +0.09 |
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 | | +0.50 |
Eight districts improved; four little changed or mixed. | Labor markets weak but stabilizing; job cuts slowing; Boston beginning to hire and reverse pay cuts. | | Inflation Pressure (higher = headwind) | | +0.25 |
Little upward wage pressure; commodity prices rising; finished goods prices stable. | Loan demand steady to weaker; tight standards; quality steady or deteriorating. | Many contacts optimistic about the near-term outlook; recovery expected to take hold in 2010. |
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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 | +1 | +1 | | Health CareXLV | +1 | · | · | · | +1 | · | · | · | · | · | · | · | | FinancialsXLF | · | −1 | −1 | −1 | · | −1 | · | −1 | −1 | −1 | −1 | −1 | | Consumer DiscretionaryXLY | · | +1 | +1 | · | +1 | +1 | · | −1 | · | +1 | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | +1 | +1 | +1 | · | −1 | · | −1 | +1 | +1 | · | +1 | | Consumer StaplesXLP | · | · | +1 | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | +1 | · | +1 | · | · | +1 | +1 | +1 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | −2 | −1 | · | −1 | · | −1 | −1 | · | · | · | · | | MaterialsXLB | · | · | · | · | · | · | +1 | · | +1 | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Information Technology +1 San Francisco Manufacturing firmed; memory chip prices firming. Why it matters: Largest IT weight positive. | Consumer Discretionary +1 Most districts Consumer spending picked up moderately. Why it matters: Discretionary turns positive. | Industrials +1 New York, Philadelphia, Cleveland, Minneapolis, Kansas City, San Francisco Modest increases in manufacturing. Why it matters: Industrials positive. | Real Estate −2 New York NYC sales and rental markets particularly weak. Why it matters: Large Real Estate weight. | Real Estate −1 Most districts Commercial real estate weak and deteriorating. Why it matters: Real Estate negative. | Energy +1 Dallas, Kansas City, San Francisco Oil and gas production steady to increasing. Why it matters: Energy positive. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Mixed with signs of improvement; recovery expected in 2010. |
| New York Growing +0.5 Outlook ▲ Further signs of improvement. |
| Philadelphia Flat Outlook ▲ Mixed. |
| Cleveland Flat Outlook ▲ Little change; recovery fragile. |
| Richmond Flat Outlook ▲ More mixed; manufacturing stalled. |
| Atlanta Flat Outlook ▲ Mixed; home sales above year-ago. |
| Chicago Growing +0.5 Outlook ▶ Edged up then leveled off. |
| St. Louis Growing +0.5 Outlook ▲ Weak but signs of improvement. |
| Minneapolis Growing +0.5 Outlook ▲ Up slightly. |
| Kansas City Growing +0.5 Outlook ▲ Continued to expand modestly. |
| Dallas Growing +1.0 Outlook ▲ Firmed; outlooks more positive. |
| San Francisco Growing +0.5 Outlook ▲ Picked up modestly. |
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Where the signal is thin or split Divergences to watch | Discretionary Turns Positive — first broad +1 consumer reading since 2006.
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| | Real Estate — commercial real estate the main laggard into 2010.
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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 |