EconomyxAI · Sector Watch October 2002Released October 23, 2002 |
| |
Conditions index −0.23 avg of 11 sectors, −2 to +2 |
| Outlook index −0.13 sectors with an outlook |
| Districts growing 3/12 per National Summary |
| Positive momentum 3/11 sectors improving |
|
|
This release in brief The read | ■ | Released October 23, 2002, with information collected before October 15. | | ■ | Most districts said activity remained sluggish; Cleveland and Dallas described slowing or contraction, while Richmond, St. Louis and San Francisco saw modest growth. | | ■ | Retail sales were weak in every district and auto sales fell back from very high levels; manufacturing declined or grew more slowly in most districts. | | ■ | Housing stayed upbeat but softened at the high end, while commercial real estate weakened further; consumer and mortgage lending were strong, business lending weak, and credit quality slipped in some districts. | | ■ | Labor markets were lackluster everywhere; prices were stable apart from health care, insurance and shipping, and contacts cited war, terrorism and the West Coast port lockout as sources of uncertainty. |
|
Sector prospects Where the 3–12 month view points Strongest prospects Health Care
XLV
▶ Steady | +0.20 |
| Consumer Staples
XLP
▶ Steady | +0.07 |
| Communication Services
XLC
▶ Steady | −0.08 |
|
|
| Weakest prospects Consumer Discretionary
XLY
▼ Weakening | −0.68 |
| Real Estate
XLRE
▼ Turning down | −0.37 |
| Materials
XLB
▼ Weakening | −0.32 |
|
|
|
|
All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
|---|
| 1 | Health Care
XLV | | +0.20 | Leaning Favorable | +0.29 | +0.50 | ▶ +0.09 | | 2 | Consumer Staples
XLP | | +0.07 | Neutral | +0.09 | n/a | ▶ +0.09 | | 3 | Communication Services
XLC | | −0.08 | Neutral | −0.04 | −0.50 | ▶ +0.14 | | 4 | Utilities
XLU | | −0.12 | Neutral | −0.05 | −0.50 | ▶ −0.05 | | 5 | Financials
XLF | | −0.13 | Neutral | −0.12 | −0.10 | ▶ −0.20 | | 6 | Energy
XLE | | −0.13 | Neutral | −0.61 | +0.50 | ▼ −0.71 | | 7 | Industrials
XLI | | −0.31 | Leaning Unfavorable | −0.69 | +0.05 | ▼ −0.63 | | 8 | Information Technology
XLK | | −0.32 | Leaning Unfavorable | −0.14 | −0.35 | ▶ −0.47 | | 9 | Materials
XLB | | −0.32 | Leaning Unfavorable | −0.16 | −0.20 | ▼ −0.46 | | 10 | Real Estate
XLRE | | −0.37 | Leaning Unfavorable | −0.22 | −0.31 | ▼ −0.29 | | 11 | Consumer Discretionary
XLY | | −0.68 | Unfavorable | −0.91 | −0.39 | ▼ −0.89 |
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 |
Most districts sluggish; Cleveland and Dallas slowing or contracting; only three districts reported modest growth or improvement. | Labor markets lackluster in all districts; Chicago and Minneapolis softened; layoffs in finance, airlines and manufacturing; temp demand up only in Richmond and Philadelphia. | | Inflation Pressure (higher = headwind) | | +0.00 |
Overall prices stable; wages subdued; significant increases only in health care, insurance and shipping; retail and some finished goods prices falling. | Strong consumer and refinancing demand but weak commercial lending, tighter standards, and slight credit-quality deterioration in four districts. | Cleveland optimism 'dissipated'; Dallas contacts 'significantly more pessimistic' citing war, terrorism and the port strike; retailers see dim holidays. Manufacturers still expect improvement. |
|
Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
|---|
| Information TechnologyXLK | −1 | · | +1 | · | · | · | · | · | · | · | −1 | · | | Health CareXLV | +1 | · | · | · | · | · | · | · | · | · | · | +1 | | FinancialsXLF | +2 | −1 | · | −1 | +1 | · | · | +1 | · | −1 | · | · | | Consumer DiscretionaryXLY | · | −1 | −1 | −2 | · | −1 | −1 | · | −1 | −1 | −1 | −1 | | Communication ServicesXLC | · | · | −1 | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | · | · | · | −1 | · | −1 | +1 | · | −1 | −2 | −1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | +1 | · | | EnergyXLE | · | · | · | · | · | · | · | · | −1 | −1 | −1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | −1 | · | · | · | · | | Real EstateXLRE | · | −1 | · | · | · | · | · | +1 | · | · | −1 | · | | MaterialsXLB | · | · | · | −1 | · | · | · | +1 | · | · | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
|
Top highlights What moved the scores Consumer Discretionary −1 broad−based Nine districts incl. Cleveland, Chicago, Dallas, San Francisco, New York All districts noted weak retail sales; motor vehicle sales slowed from very high levels. Why it matters: Broad negatives, including Cleveland's -2, push Discretionary toward the bottom. | Industrials −1 to −2 Dallas, Chicago, San Francisco, Boston, Richmond, Kansas City Airlines 'bad and getting worse'; trucking demand 30 percent below a year ago; machine tools worst in 30 years. Why it matters: Six negative districts, including large ones, make Industrials one of the weakest sectors. | Financials −1 New York Securities layoffs expected to intensify; bonuses down at least 25 percent. Why it matters: New York's heavy Financials weight makes this reading a large drag. | Financials +2 Boston Life insurance sales up 30 to 40 percent; P&C rates up 10 to 25 percent. Why it matters: The only +2 in the matrix partly offsets New York's drag. | Energy −1 Dallas, Kansas City, Minneapolis Drilling has not responded to higher oil and gas prices; rig counts declined. Why it matters: All three energy districts negative turns Energy negative despite rising prices. | Real Estate −1 New York, Dallas NYC co-op inventory up 60 percent and prices off 10 percent; Dallas single-family market tapered. Why it matters: Housing softening at the high end plus commercial weakness pulls Real Estate below zero. |
|
Twelve Fed districts District roundup Boston Flat Outlook ▼ The economy remains soft in New England. |
| New York Flat Outlook ▲ Further signs of slowing since the last report. |
| Philadelphia Flat Outlook ▶ Business conditions were mixed in October. |
| Cleveland Contracting −1.0 Outlook ▼ Activity characterized as 'slowing,' 'stagnating,' or 'declining.' |
| Richmond Growing +1.0 Outlook ▲ Economic growth remained moderate. |
| Atlanta Flat Outlook ▶ Economy continued to display sluggishness. |
| Chicago Contracting −1.0 Outlook ▼ Economic activity softened. |
| St. Louis Growing +1.0 Economy has shown signs of improvement. |
| Minneapolis Flat Economic activity was slow. |
| Kansas City Flat Outlook ▲ Economy slowed somewhat; contacts cautiously optimistic. |
| Dallas Contracting −1.0 Outlook ▼ Activity showed signs of contracting. |
| San Francisco Growing +1.0 Economic activity grew modestly. |
|
|
Where the signal is thin or split Divergences to watch | Financials — Boston's +2 on insurance strength offsets New York's securities weakness; the weighted score depends heavily on New York's large financial weight.
|
| | Consumer Discretionary — Nine of twelve districts negative, the broadest retail weakness since late 2001.
|
| | Communication Services & Utilities — Thin coverage; only Philadelphia telecom and St. Louis power plant halts scored.
|
| | District validation: Boston overall 0 despite a +2 insurance reading; Dallas -1 overall consistent with negative Industrials, Energy and Real Estate.
|
|
|
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 |