EconomyxAI · Sector Watch October 2014Released October 15, 2014 |
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Conditions index +0.48 avg of 11 sectors, −2 to +2 |
| Outlook index +0.29 sectors with an outlook |
| Districts growing 11/12 per National Summary |
| Positive momentum 5/11 sectors improving |
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This release in brief The read | ■ | Released October 15, 2014, with information collected before October 6, 2014. | | ■ | Modest to moderate growth at a pace similar to the previous report; moderate in six districts, modest in five, mixed in Boston. | | ■ | Consumer spending grew slightly to moderately; tourism upbeat; manufacturing increased in most districts though New York stalled and Boston weakened. | | ■ | Commercial real estate and lending grew; oil and gas production increased; employment pace steady; price pressures subdued and some commodity prices fell. |
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Sector prospects Where the 3–12 month view points Strongest prospects Information Technology
XLK
▶ Steady | +0.55 |
| Real Estate
XLRE
▶ Steady | +0.48 |
| Industrials
XLI
▲ Turning up | +0.42 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | −0.03 |
| Materials
XLB
▼ Turning down | −0.00 |
| Communication Services
XLC
▶ Steady | +0.04 |
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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 | Information Technology
XLK | | +0.55 | Favorable | +0.73 | +0.79 | ▶ +0.08 | | 2 | Real Estate
XLRE | | +0.48 | Leaning Favorable | +0.89 | +0.50 | ▶ +0.03 | | 3 | Industrials
XLI | | +0.42 | Leaning Favorable | +0.83 | +0.62 | ▲ −0.20 | | 4 | Financials
XLF | | +0.33 | Leaning Favorable | +0.81 | +0.50 | ▶ −0.14 | | 5 | Consumer Discretionary
XLY | | +0.24 | Leaning Favorable | +0.54 | +0.56 | ▼ −0.39 | | 6 | Energy
XLE | | +0.19 | Leaning Favorable | +0.64 | +0.23 | ▶ −0.05 | | 7 | Utilities
XLU | | +0.11 | Neutral | +0.21 | +0.00 | ▶ +0.20 | | 8 | Health Care
XLV | | +0.11 | Neutral | +0.29 | +0.00 | ▶ +0.10 | | 9 | Communication Services
XLC | | +0.04 | Neutral | +0.05 | +0.00 | ▶ +0.03 | | 10 | Materials
XLB | | −0.00 | Neutral | +0.33 | +0.00 | ▼ −0.28 | | 11 | Consumer Staples
XLP | | −0.03 | Neutral | −0.09 | +0.00 | ▶ −0.01 |
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 |
Modest to moderate growth, pace similar to previous report. | Employment expanding at same pace; skill shortages. | | Inflation Pressure (higher = headwind) | | −0.25 |
Price pressures subdued; several commodity prices fell. | Banking conditions improved; commercial loans up nearly everywhere; no credit deterioration. | Contacts generally optimistic about future activity. |
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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 | · | −1 | · | +1 | · | · | · | · | · | · | +1 | | FinancialsXLF | · | +1 | +1 | +1 | · | +1 | +1 | +1 | · | · | +1 | +1 | | Consumer DiscretionaryXLY | +1 | −1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | · | | Communication ServicesXLC | · | · | · | · | +1 | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | · | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | −1 | −1 | · | · | · | | EnergyXLE | · | · | +1 | +1 | +1 | −1 | · | +1 | +1 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | +1 | | Real EstateXLRE | +1 | +1 | · | +1 | +1 | +1 | +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 Consumer Discretionary −1 New York Major chains reported September sales below plan. Why it matters: NY weight drags Discretionary. | Consumer Discretionary +1 broad−based Broad-based Consumer spending grew moderately; tourism upbeat. Why it matters: Discretionary positive in 10 districts. | Industrials +1 broad−based Broad-based Manufacturing increased in most districts. Why it matters: Industrials positive. | Industrials −1 Boston Manufacturers cited weaker results. Why it matters: Industrials offset. | Information Technology +1 San Francisco Worldwide semiconductor sales up markedly. Why it matters: SF carries 47% of IT weight. | Financials +1 broad−based Broad-based Commercial loan volumes increased in nearly all districts. Why it matters: Financials positive. |
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Twelve Fed districts District roundup Boston Flat Outlook ▲ Mixed picture. |
| New York Growing +0.5 Outlook ▲ Slowed to a more modest pace. |
| Philadelphia Growing +0.5 Outlook ▲ Grow at a modest pace. |
| Cleveland Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Richmond Growing +0.5 Outlook ▲ Improved modestly. |
| Atlanta Growing +0.5 Outlook ▲ Improving at a modest pace. |
| Chicago Growing +1.0 Outlook ▲ Growth remained moderate. |
| St. Louis Growing +1.0 Outlook ▲ Increased at a moderate pace. |
| Minneapolis Growing +1.0 Outlook ▲ Grew at a moderate pace. |
| Kansas City Growing +0.5 Outlook ▲ Grew modestly. |
| Dallas Growing +1.0 Outlook ▲ Grew at a moderate pace. |
| San Francisco Growing +1.0 Outlook ▲ Improve moderately. |
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Where the signal is thin or split Divergences to watch | Consumer Discretionary — New York (-1) pulls the weighted score below the unweighted average.
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| | Industrials — Boston (-1) and New York (0) trim the weighted score.
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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 |