EconomyxAI · Sector Watch October 2004Released October 27, 2004 |
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Conditions index +0.36 avg of 11 sectors, −2 to +2 |
| Outlook index +0.16 sectors with an outlook |
| Districts growing 8/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Released October 27, 2004, with information collected before October 18, 2004. | | ■ | Activity continued to expand in September and early October; Richmond and Dallas said the pace quickened, New York, Cleveland and San Francisco said it moderated, St. Louis was mixed and Atlanta saw hurricane disruptions. | | ■ | Consumer spending was mixed and many reports said higher energy costs were constraining household and business spending; election uncertainty weighed on some consumers. | | ■ | Business outlays picked up with modest gains in capital spending and hiring; manufacturing expanded further, with solid gains in Richmond, Chicago and Kansas City. | | ■ | More manufacturers, truckers and service firms were able to pass on higher energy and materials costs, but retail prices and wages stayed largely subdued. |
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Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▲ Turning up | +0.58 |
| Materials
XLB
▶ Steady | +0.37 |
| Industrials
XLI
▶ Steady | +0.35 |
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| Weakest prospects Information Technology
XLK
▼ Weakening | −0.03 |
| Consumer Staples
XLP
▶ Steady | −0.01 |
| Utilities
XLU
▶ Steady | +0.01 |
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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 | | +0.58 | Favorable | +0.71 | +0.50 | ▲ +0.50 | | 2 | Materials
XLB | | +0.37 | Leaning Favorable | +0.70 | +0.00 | ▶ +0.05 | | 3 | Industrials
XLI | | +0.35 | Leaning Favorable | +0.68 | +0.47 | ▶ −0.28 | | 4 | Consumer Discretionary
XLY | | +0.27 | Leaning Favorable | +0.33 | +0.50 | ▲ +0.17 | | 5 | Financials
XLF | | +0.17 | Leaning Favorable | +0.16 | +0.36 | ▶ −0.37 | | 6 | Health Care
XLV | | +0.12 | Neutral | +0.29 | +0.00 | ▶ −0.01 | | 7 | Communication Services
XLC | | +0.12 | Neutral | +0.40 | +0.00 | ▶ −0.04 | | 8 | Real Estate
XLRE | | +0.09 | Neutral | +0.52 | −0.05 | ▶ −0.22 | | 9 | Utilities
XLU | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 10 | Consumer Staples
XLP | | −0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Information Technology
XLK | | −0.03 | Neutral | +0.13 | +0.00 | ▼ −0.40 |
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 |
Continued expansion; two districts quickened, five continued, three moderated, one mixed and one hurricane-disrupted. | Hiring increased modestly with more permanent hiring and signs of broader labor-market firming; retention bonuses returning in Chicago. | | Inflation Pressure (higher = headwind) | | +0.75 |
Concern over energy, metals and construction input costs; more firms passing increases along; retail prices still subdued. | Business loan demand strengthened in many districts and credit quality improved; household demand softened as refinancing fell. | Higher energy costs constraining spending and election uncertainty, but capital spending and hiring picking up. |
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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 | · | | Health CareXLV | +1 | · | · | · | · | · | · | · | · | · | · | +1 | | FinancialsXLF | · | −1 | +1 | +1 | · | +1 | · | +1 | · | · | +1 | +1 | | Consumer DiscretionaryXLY | +1 | −1 | +1 | −1 | +1 | · | · | · | +1 | +1 | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | · | +1 | · | +1 | · | +2 | · | +1 | +1 | +1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +2 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | · | −1 | · | · | +1 | +1 | · | · | · | +1 | | MaterialsXLB | · | · | · | · | · | · | +2 | · | +1 | +1 | +1 | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Chicago Manufacturing expanded solidly; strength widespread. Why it matters: High Industrials weight. | Energy +2 Kansas City Energy activity very strong. Why it matters: Energy positive. | Materials +2 Chicago Steel mills could not keep up with demand. Why it matters: Materials strength. | Financials −1 New York Reduced loan demand; tighter credit standards. Why it matters: Largest Financials weight. | Consumer Discretionary −1 New York, Cleveland Sales below plan; tourism softened. Why it matters: Discretionary drag. | Consumer Discretionary +1 Boston, Philadelphia, Richmond, San Francisco Tourism strong; retail above a year ago. Why it matters: Discretionary offset. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Continues to expand. |
| New York Flat Outlook ▶ Further signs of cooling off. |
| Philadelphia Growing +1.0 Outlook ▲ Increased. |
| Cleveland Flat Outlook ▶ Growth appeared to moderate. |
| Richmond Growing +1.0 Outlook ▲ Expanded at a quicker pace. |
| Atlanta Flat Outlook ▲ Moderated, partly from hurricanes. |
| Chicago Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| St. Louis Flat Outlook ▶ Mixed. |
| Minneapolis Growing +1.0 Outlook ▲ Signs of growth evident. |
| Kansas City Growing +1.0 Outlook ▲ Continued to expand. |
| Dallas Growing +1.0 Outlook ▲ Picked up slightly. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a solid pace. |
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Where the signal is thin or split Divergences to watch | Financials — New York's -1 carries the largest Financials weight and pulls the weighted score below the simple average.
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| | Consumer Discretionary — New York's -1 offsets broad +1s elsewhere, leaving the weighted score near zero.
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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 |