EconomyxAI · Sector Watch October 2008Released October 15, 2008 |
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Conditions index −0.57 avg of 11 sectors, −2 to +2 |
| Outlook index −0.60 sectors with an outlook |
| Districts growing 0/12 per National Summary |
| Positive momentum 0/11 sectors improving |
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This release in brief The read | ■ | Released October 15, 2008, with information collected before October 6, 2008. | | ■ | Economic activity weakened in September across all twelve districts, and several districts said contacts had grown more pessimistic about the outlook. | | ■ | Consumer spending fell in most districts, with declines in retail, autos and tourism; reduced credit availability limited auto sales, and Dallas said its economy 'slowed markedly.' | | ■ | Manufacturing moved lower in most districts; residential real estate stayed weak everywhere and commercial construction slowed, with project delays and cancellations tied to tight credit. | | ■ | Credit conditions tightened in every reporting district, with interbank liquidity problems and deposit withdrawals after bank closings, while cost pressures eased as oil and commodity prices fell. |
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Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▼ Turning down | +0.03 |
| Consumer Staples
XLP
▶ Steady | −0.12 |
| Utilities
XLU
▶ Steady | −0.23 |
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| Weakest prospects Financials
XLF
▼ Turning down | −1.22 |
| Consumer Discretionary
XLY
▼ Turning down | −1.10 |
| Real Estate
XLRE
▼ Turning down | −1.07 |
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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 | | +0.03 | Neutral | +0.33 | +0.34 | ▼ −1.06 | | 2 | Consumer Staples
XLP | | −0.12 | Neutral | +0.42 | −0.50 | ▶ −0.03 | | 3 | Utilities
XLU | | −0.23 | Leaning Unfavorable | +0.00 | −0.50 | ▶ +0.00 | | 4 | Health Care
XLV | | −0.26 | Leaning Unfavorable | −0.02 | −0.50 | ▶ −0.15 | | 5 | Materials
XLB | | −0.34 | Leaning Unfavorable | −0.11 | −0.50 | ▶ −0.26 | | 6 | Communication Services
XLC | | −0.34 | Leaning Unfavorable | −0.15 | −0.50 | ▶ −0.17 | | 7 | Information Technology
XLK | | −0.71 | Unfavorable | −0.64 | −0.50 | ▼ −1.12 | | 8 | Industrials
XLI | | −0.88 | Unfavorable | −1.03 | −0.93 | ▼ −0.78 | | 9 | Real Estate
XLRE | | −1.07 | Unfavorable | −1.72 | −1.00 | ▼ −0.47 | | 10 | Consumer Discretionary
XLY | | −1.10 | Unfavorable | −1.64 | −1.00 | ▼ −0.63 | | 11 | Financials
XLF | | −1.22 | Unfavorable | −1.69 | −1.00 | ▼ −0.79 |
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 | | −1.50 |
All twelve districts weakened; contacts more pessimistic. | Labor markets weakened in most districts; hiring plans reduced. | | Inflation Pressure (higher = headwind) | | −0.50 |
Inflationary pressures moderated as energy and commodity prices fell; pass-through of earlier increases continued. | Credit tightened in every reporting district; interbank liquidity problems; deposit withdrawals after bank closings. | Several districts more pessimistic; capital spending plans cut on uncertainty and credit concerns. |
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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 | | Health CareXLV | +1 | · | · | · | +1 | · | +1 | −1 | · | · | · | −1 | | FinancialsXLF | −1 | −2 | −1 | −2 | −1 | −2 | −2 | −1 | −1 | −2 | −1 | −2 | | Consumer DiscretionaryXLY | −1 | −1 | −1 | −2 | −1 | −2 | −2 | −1 | −1 | −1 | −2 | −2 | | Communication ServicesXLC | · | −1 | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | −1 | · | −1 | −1 | −1 | −1 | −1 | · | −1 | −2 | −1 | | Consumer StaplesXLP | · | · | · | · | · | · | +1 | · | · | · | +1 | +1 | | EnergyXLE | · | · | · | +1 | · | −1 | · | · | +1 | +1 | · | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | −2 | −1 | −1 | −1 | −2 | −2 | −1 | −1 | −1 | −2 | −2 | | MaterialsXLB | · | · | · | −1 | · | · | −1 | · | +1 | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Financials −2 New York Credit conditions tightened; loan pricing increased. Why it matters: Largest Financials weight at -2. | Financials −2 San Francisco, Chicago, Atlanta, Cleveland, Kansas City Reduced credit availability; liquidity problems; loan quality deteriorated. Why it matters: Broad -2 drives Financials to the bottom. | Real Estate −2 New York, San Francisco, Dallas Sharpest commercial real estate declines. Why it matters: Large weights pull Real Estate down. | Consumer Discretionary −2 San Francisco Retail sales very sluggish. Why it matters: Largest Discretionary weight. | Consumer Discretionary −2 Cleveland, Chicago, Atlanta, Dallas New car purchases declined sharply; households trading down. Why it matters: Broad Discretionary decline. | Industrials −2 Dallas Economy slowed markedly; hurricane disruptions. Why it matters: Industrials pulled lower. |
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Twelve Fed districts District roundup Boston Contracting −1.5 Outlook ▼ Softened; deteriorated sharply in September in some cases. |
| New York Contracting −1.5 Outlook ▼ Weakened; non-manufacturers anticipate cutbacks. |
| Philadelphia Contracting −1.0 Outlook ▼ Softened in most sectors; outlook not positive. |
| Cleveland Contracting −1.0 Outlook ▼ Weakened since mid-August; new car sales down sharply. |
| Richmond Contracting −1.0 Outlook ▼ Weakened; credit availability reduced. |
| Atlanta Contracting −1.5 Outlook ▼ Weakened further; financing increasingly difficult. |
| Chicago Contracting −1.5 Outlook ▼ Weakened; heightened concern about outlook. |
| St. Louis Contracting −1.5 Outlook ▼ Continued to deteriorate. |
| Minneapolis Contracting −1.0 Outlook ▼ Slowed; energy and mining up. |
| Kansas City Contracting −1.0 Outlook ▼ Slowed after stronger summer growth. |
| Dallas Contracting −1.5 Outlook ▼ Slowed markedly; hurricane disruptions. |
| San Francisco Contracting −1.5 Outlook ▼ Weakened further; credit availability dropped. |
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Where the signal is thin or split Divergences to watch | Financials — September financial turmoil drove the first -2 Credit & Rates macro reading.
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| | Energy — the only sector with a positive bottom-up reading as prices fell but drilling rose.
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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 |