EconomyxAI · Sector Watch October 2018Released October 24, 2018 |
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Conditions index +0.29 avg of 11 sectors, −2 to +2 |
| Outlook index +0.24 sectors with an outlook |
| Districts growing 10/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Released October 24, 2018, with information collected on or before October 15, 2018. | | ■ | Most districts reported modest to moderate growth; New York and St. Louis slight, Dallas robust on manufacturing, retail and services. | | ■ | Manufacturers reported moderate output growth but faced rising materials and shipping costs and trade uncertainty; transportation demand strong. | | ■ | Real estate mixed with rising prices and low inventory; consumer spending up modestly; Hurricane Florence hurt Carolinas tourism and farms. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.37 |
| Consumer Discretionary
XLY
▶ Steady | +0.32 |
| Real Estate
XLRE
▲ Turning up | +0.30 |
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| Weakest prospects Materials
XLB
▼ Weakening | −0.10 |
| 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 | Industrials
XLI | | +0.37 | Leaning Favorable | +1.01 | +0.48 | ▶ −0.12 | | 2 | Consumer Discretionary
XLY | | +0.32 | Leaning Favorable | +0.74 | +0.50 | ▶ −0.07 | | 3 | Real Estate
XLRE | | +0.30 | Leaning Favorable | +0.70 | +0.20 | ▲ +0.01 | | 4 | Information Technology
XLK | | +0.29 | Leaning Favorable | +0.16 | +0.54 | ▶ +0.10 | | 5 | Financials
XLF | | +0.26 | Leaning Favorable | +0.38 | +0.36 | ▼ −0.42 | | 6 | Health Care
XLV | | +0.09 | Neutral | +0.21 | +0.00 | ▶ +0.12 | | 7 | Energy
XLE | | +0.09 | Neutral | +0.10 | +0.55 | ▶ −0.54 | | 8 | Communication Services
XLC | | +0.01 | Neutral | +0.00 | +0.00 | ▶ −0.03 | | 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 | Materials
XLB | | −0.10 | Neutral | −0.12 | +0.00 | ▼ −0.51 |
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 in most districts; New York and St. Louis slight; Dallas robust. | Employment up modestly or moderately; San Francisco robust; shortages restraining growth. | | Inflation Pressure (higher = headwind) | | +0.75 |
Prices rising modestly to moderately; manufacturers raising prices on tariff-driven input costs. | Lending up in most districts; NIMs improving; New York household demand weaker. | Outlooks positive but trade uncertainty delaying capital spending. |
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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 | +2 | · | · | · | · | · | · | · | · | +1 | · | · | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | +1 | | FinancialsXLF | · | −1 | +1 | · | +1 | +1 | · | +1 | +1 | +1 | +1 | +2 | | Consumer DiscretionaryXLY | +2 | · | +1 | −1 | · | +1 | +1 | · | +1 | +1 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | · | +1 | +1 | +1 | +1 | +1 | +1 | · | +1 | +2 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | · | +1 | · | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | · | · | · | +1 | +1 | · | −1 | · | · | · | +2 | | MaterialsXLB | · | · | · | · | · | · | +1 | · | · | · | · | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Dallas Manufacturing output increased robustly. Why it matters: Strong Industrials read. | Financials +2 San Francisco Profitability and NIMs improved noticeably. Why it matters: Large Financials weight. | Real Estate +2 San Francisco Real estate expanded at a strong pace. Why it matters: SF carries large Real Estate weight. | Consumer Discretionary +2 Boston Robust retail sales; strong tourism. Why it matters: Strong Discretionary read. | Information Technology +2 Boston Robust software and IT growth. Why it matters: Strong IT read. | Industrials +1 broad−based Broad-based Moderate manufacturing output growth. Why it matters: Industrials positive in ten districts. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Expanded at a moderate to strong pace. |
| New York Flat Outlook ▶ Grown slightly. |
| Philadelphia Growing +0.5 Outlook ▲ Continued at a modest pace. |
| Cleveland Growing +0.5 Outlook ▲ Grew modestly. |
| Richmond Growing +1.0 Outlook ▲ Expanded at a moderate rate. |
| Atlanta Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Chicago Growing +0.5 Outlook ▲ Slowed to a modest pace. |
| St. Louis Flat Outlook ▶ Improved slightly. |
| Minneapolis Growing +1.0 Outlook ▶ Grew moderately overall. |
| Kansas City Growing +1.0 Outlook ▲ Increased at a moderate pace. |
| Dallas Growing +1.5 Outlook ▲ Solid expansion continued. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
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Where the signal is thin or split Divergences to watch | Financials — San Francisco +2 outweighs New York -1, lifting weighted Financials.
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| | Information Technology — Boston +2 carries IT while San Francisco sits at 0.
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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 |