EconomyxAI · Beige Book Sector Monitor November 2010Released December 1, 2010 |
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Conditions index +0.32 avg of 11 sectors, −2 to +2 |
| Outlook index +0.48 sectors with an outlook |
| Districts growing 10/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released December 1, 2010, with information collected before November 19, 2010. | | ■ | The economy continued to improve on balance: Boston, Cleveland, Atlanta, Dallas and San Francisco grew slightly to modestly, New York, Richmond, Chicago, Minneapolis and Kansas City grew somewhat faster, and Philadelphia and St. Louis were mixed. | | ■ | Consumer spending reports were mostly positive with upbeat holiday expectations, new car and light truck sales rose in nine districts, and tourism improved in every reporting district. | | ■ | Manufacturing expanded in almost every district, strongest in metal fabrication and autos; housing stayed depressed with further weakening in several districts, while commercial real estate was mixed. | | ■ | Lending was stable and credit quality steady to improving; hiring improved somewhat, energy kept expanding with more rigs and Marcellus shale output, and input costs rose while final prices stayed stable. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Discretionary
XLY
▲ Improving | +0.66 |
| Industrials
XLI
▶ Steady | +0.60 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | −0.39 |
| Consumer Staples
XLP
▶ Steady | +0.04 |
| Utilities
XLU
▶ Steady | +0.20 |
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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 | Consumer Discretionary
XLY | | +0.66 | Favorable | +0.81 | +0.94 | ▲ +0.41 | | 2 | Industrials
XLI | | +0.60 | Favorable | +1.09 | +0.71 | ▶ +0.44 | | 3 | Energy
XLE | | +0.51 | Favorable | +1.25 | +0.50 | ▶ −0.20 | | 4 | Materials
XLB | | +0.48 | Leaning Favorable | +0.60 | +0.50 | ▶ +0.12 | | 5 | Information Technology
XLK | | +0.38 | Leaning Favorable | +0.61 | +0.50 | ▶ −0.07 | | 6 | Financials
XLF | | +0.31 | Leaning Favorable | +0.11 | +0.52 | ▶ +0.35 | | 7 | Health Care
XLV | | +0.30 | Leaning Favorable | +0.19 | +0.50 | ▶ +0.18 | | 8 | Communication Services
XLC | | +0.22 | Leaning Favorable | +0.00 | +0.50 | ▶ +0.00 | | 9 | Utilities
XLU | | +0.20 | Leaning Favorable | +0.00 | +0.50 | ▶ +0.00 | | 10 | Consumer Staples
XLP | | +0.04 | Neutral | −0.10 | +0.50 | ▶ −0.30 | | 11 | Real Estate
XLRE | | −0.39 | Leaning Unfavorable | −1.06 | −0.37 | ▶ +0.06 |
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 | | +0.75 |
Economy continued to improve; five districts somewhat stronger; two mixed. | Hiring improved somewhat in most districts; skilled worker shortages; preference for temporary workers. | | Inflation Pressure (higher = headwind) | | −0.25 |
Final prices stable despite rising agricultural, metals and fuel costs; some manufacturers plan price increases. | Lending stable; credit quality steady to improving; delinquencies down in Cleveland and Richmond. | Outlook for 2011 slightly more optimistic; holiday expectations positive. |
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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 | · | · | · | · | +1 | · | · | · | · | | FinancialsXLF | · | · | · | +1 | +1 | −1 | +1 | · | · | · | · | · | | Consumer DiscretionaryXLY | · | +1 | +1 | · | · | +1 | +1 | · | +1 | +1 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | −1 | +1 | +2 | +2 | +1 | +2 | +1 | +1 | +2 | · | +1 | | Consumer StaplesXLP | · | · | · | +1 | +1 | · | · | · | · | · | · | −1 | | EnergyXLE | · | · | · | +1 | · | +1 | · | · | +1 | +2 | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | −1 | −2 | −1 | −1 | −2 | −1 | −2 | −2 | −1 | · | −1 | | MaterialsXLB | · | · | · | · | · | · | +1 | · | +1 | +1 | +1 | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Chicago, Kansas City, Cleveland, Richmond Metal fabrication and autos strong. Why it matters: Industrials lead. | Energy +2 Dallas Active rigs increased; energy strengthened. Why it matters: Large Energy weight. | Energy +2 Kansas City Energy activity rose robustly. Why it matters: Energy broad. | Consumer Discretionary +1 Most districts Retail and auto sales up; tourism improved. Why it matters: Discretionary positive. | Information Technology +1 San Francisco, Boston, Kansas City High-tech sales increased. Why it matters: IT positive. | Real Estate −2 Philadelphia, Atlanta, St. Louis, Minneapolis Further weakening in home sales. Why it matters: Real Estate bottom. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Continues to expand gradually. |
| New York Growing +1.0 Outlook ▲ Continued to expand; labor market improving. |
| Philadelphia Flat Outlook ▲ Varied across sectors. |
| Cleveland Growing +0.5 Outlook ▲ Grew at a modest pace. |
| Richmond Growing +1.0 Outlook ▲ Increased at least moderately. |
| Atlanta Growing +0.5 Outlook ▲ Rose modestly. |
| Chicago Growing +1.0 Outlook ▲ Increased at a slightly faster pace. |
| St. Louis Flat Outlook ▲ Mixed. |
| Minneapolis Growing +1.0 Outlook ▲ Grew at a firm pace. |
| Kansas City Growing +1.0 Outlook ▲ Strengthened. |
| Dallas Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| San Francisco Growing +0.5 Outlook ▲ Continued to edge up. |
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Where the signal is thin or split Divergences to watch | Broad Recovery — every sector except Real Estate positive by year-end 2010.
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| | Real Estate — the weakest sector throughout 2009-2010.
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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 |