EconomyxAI · Sector Watch October 1999Released November 3, 1999 · Data through October 25 |
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Conditions index +0.36 avg of 11 sectors, −2 to +2 |
| Outlook index +0.03 sectors with an outlook |
| Districts growing 9/12 per National Summary |
| Positive momentum 2/11 sectors improving |
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This release in brief The read | ■ | Most districts reported strong growth, but some slowing was noted. | | ■ | Four districts (Chicago, Dallas, Kansas City, New York) reported weakening retail sales, though most retailers expect holiday sales to beat last year. | | ■ | Manufacturing advanced in almost all districts; Kansas City was the only district to report slowing, and Boston's semiconductor and telecom suppliers saw double-digit gains. | | ■ | Real estate and construction stayed robust in most districts but showed signs of moderating as higher rates curbed home sales in Boston, Chicago and Kansas City. | | ■ | Mining and energy showed signs of recharging, with rig counts in Dallas, Kansas City and Minneapolis above early-summer levels and iron ore mines reopening. |
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Sector prospects Where the 3–12 month view points Strongest prospects Materials
XLB
▶ Steady | +0.41 |
| | Information Technology
XLK
▶ Steady | +0.32 |
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| Weakest prospects Financials
XLF
▼ Turning down | −0.12 |
| Consumer Staples
XLP
▶ Steady | −0.04 |
| Real Estate
XLRE
▼ Weakening | −0.00 |
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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 | Materials
XLB | | +0.41 | Leaning Favorable | +0.43 | +0.50 | ▶ +0.28 | | 2 | Energy
XLE | | +0.38 | Leaning Favorable | +0.61 | n/a | ▶ +0.29 | | 3 | Information Technology
XLK | | +0.32 | Leaning Favorable | +0.66 | n/a | ▶ +0.00 | | 4 | Consumer Discretionary
XLY | | +0.30 | Leaning Favorable | +0.58 | +0.54 | ▶ −0.23 | | 5 | Industrials
XLI | | +0.23 | Leaning Favorable | +0.79 | +0.09 | ▶ −0.03 | | 6 | Communication Services
XLC | | +0.13 | Neutral | +0.40 | n/a | ▶ +0.00 | | 7 | Health Care
XLV | | +0.11 | Neutral | −0.07 | n/a | ▶ −0.11 | | 8 | Utilities
XLU | | +0.02 | Neutral | +0.00 | n/a | ▶ +0.00 | | 9 | Real Estate
XLRE | | −0.00 | Neutral | +0.52 | −0.42 | ▼ −0.39 | | 10 | Consumer Staples
XLP | | −0.04 | Neutral | −0.05 | −0.50 | ▶ −0.04 | | 11 | Financials
XLF | | −0.12 | Neutral | +0.13 | +0.00 | ▼ −0.54 |
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 |
Most districts still report strong growth, but New York, Chicago and Kansas City slowed and St. Louis growth moderated on labor shortages; Boston and Minneapolis remained vigorous. | Labor markets tight everywhere with many districts reporting a pickup in wage increases; Chicago staffing wages up 10-20% since July and St. Louis increases approaching 6%. | | Inflation Pressure (higher = headwind) | | +0.50 |
Overall prices stable, but manufacturing inputs, health care, memory chips (+25% in Dallas) and construction materials rose; retail prices edged down in Kansas City and Dallas. | Overall loan demand brisk, but consumer demand softened in four districts, New York saw weaker overall demand with tighter standards and Cleveland lending fell. | Most retailers expect holiday sales above last year and Boston manufacturers expect higher 2000 revenues on Asia, but Philadelphia warns of a pullback if rates rise and more San Francisco respondents expect regional growth to slow. |
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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 | | Health CareXLV | · | · | −1 | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | −1 | +1 | −1 | +1 | +1 | +1 | · | · | +1 | · | +1 | | Consumer DiscretionaryXLY | +1 | · | +1 | +1 | +1 | · | · | · | +2 | −1 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | · | +1 | +1 | +1 | +1 | +1 | +1 | +1 | −1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | −1 | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | +1 | · | · | +1 | · | · | +1 | +1 | · | · | +1 | | MaterialsXLB | · | · | · | · | · | · | +1 | +1 | +1 | · | · | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Financials −1 New York Loan demand weakened with tighter credit standards for all categories of loans. Why it matters: New York is about 28% of Financials; its -1 pulls the weighted score sharply below the unweighted average. | Energy +1 Dallas Domestic rig count rose 7.5% in six weeks, though oil services demand lagged. Why it matters: Dallas carries the largest Energy weight; a second +1 keeps Energy positive. | Information Technology +1 San Francisco Demand for telecom and computer equipment strong with order backlogs growing. Why it matters: San Francisco is about 47% of IT; a seventh straight +1. | Real Estate 0 Boston, Chicago, Kansas City Recent interest rate increases have curbed home sales. Why it matters: No +2 reads remain, ending Real Estate's long run at the top. | Energy +1 Minneapolis, Kansas City North Dakota rigs up from four to ten since July; Kansas City rigs 60% above the March low. Why it matters: Broadens the Energy rebound across all three energy districts. | Industrials +1 broad−based Ten districts Manufacturing advancing in almost all districts; Louisiana shipyards at full capacity. Why it matters: Breadth keeps Industrials near the top. |
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Twelve Fed districts District roundup Boston Growing +2.0 Outlook ▲ Expanding at a vigorous pace. |
| New York Flat Growth has shown signs of slowing. |
| Philadelphia Growing +1.0 Outlook ▲ Continued on an upward path. |
| Cleveland Growing +1.0 Business activity remains strong. |
| Richmond Growing +1.0 Advanced at a solid pace. |
| Atlanta Flat Outlook ▲ Mixed growth; outlook mostly upbeat. |
| Chicago Growing +1.0 Expansion slowed modestly. |
| St. Louis Growing +1.0 Operating at full capacity; some moderation. |
| Minneapolis Growing +2.0 Economy remains highly charged. |
| Kansas City Flat Outlook ▲ Slowed further, level remains solid. |
| Dallas Growing +1.0 Outlook ▲ Expanded at about the same pace. |
| San Francisco Growing +2.0 Outlook ▲ Continued strong performance. |
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Where the signal is thin or split Divergences to watch | Financials — weighted below unweighted because heavy-weight New York turns -1 while the positives are mostly lighter districts.
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| | Energy — three energy districts at +1, the broadest positive Energy reading in the series.
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| | Real Estate — no +2 reads for the first time since 1997 as higher mortgage rates slow sales; the sector drops from the top tier.
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| | Consumer Discretionary — Minneapolis's +2 is offset by Kansas City's -1 and flat reads in New York and Chicago.
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| | Utilities — no directional coverage; COMMUNICATION SERVICES has only San Francisco.
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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 |