EconomyxAI · Sector Watch October 2020Released October 21, 2020 |
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Conditions index +0.32 avg of 11 sectors, −2 to +2 |
| Outlook index +0.00 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 7/11 sectors improving |
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This release in brief The read | ■ | Released October 21, 2020, with information collected on or before October 9, 2020. | | ■ | Economic activity continued to increase across all districts, at a slight to modest pace in most. | | ■ | Manufacturing generally increased moderately; residential housing demand steady but constrained by low inventories; commercial real estate deteriorated except warehouse and industrial space. | | ■ | Consumer spending growth positive but retail leveled off in some districts; autos constrained by low inventories; outlooks generally optimistic with considerable uncertainty. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.49 |
| Real Estate
XLRE
▶ Steady | +0.36 |
| Information Technology
XLK
▶ Steady | +0.36 |
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| Weakest prospects | Consumer Staples
XLP
▶ Steady | −0.07 |
| Utilities
XLU
▶ Steady | +0.00 |
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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 | | +0.49 | Leaning Favorable | +1.00 | +0.50 | ▶ +0.26 | | 2 | Real Estate
XLRE | | +0.36 | Leaning Favorable | +0.64 | +0.50 | ▶ −0.14 | | 3 | Information Technology
XLK | | +0.36 | Leaning Favorable | +0.56 | +0.50 | ▶ −0.04 | | 4 | Materials
XLB | | +0.24 | Leaning Favorable | +0.43 | +0.00 | ▶ +0.30 | | 5 | Health Care
XLV | | +0.09 | Neutral | +0.25 | +0.00 | ▶ +0.08 | | 6 | Consumer Discretionary
XLY | | +0.07 | Neutral | +0.63 | −0.50 | ▲ +0.12 | | 7 | Communication Services
XLC | | +0.02 | Neutral | +0.02 | +0.00 | ▶ +0.02 | | 8 | Financials
XLF | | +0.02 | Neutral | +0.48 | −0.50 | ▲ +0.53 | | 9 | Utilities
XLU | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 10 | Consumer Staples
XLP | | −0.07 | Neutral | +0.00 | +0.00 | ▶ −0.28 | | 11 | Energy
XLE | | −0.23 | Leaning Unfavorable | −0.45 | −0.50 | ▶ +0.31 |
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 |
Activity increased in all districts at slight to modest pace. | Employment increased in almost all districts but growth slow. | | Inflation Pressure (higher = headwind) | | +0.50 |
Prices rose modestly; food, autos and appliances up significantly; steel and lumber costs rising. | Mortgage demand drove loan growth; delinquency concerns. | Generally optimistic with considerable uncertainty around election and pandemic. |
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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 | | FinancialsXLF | · | +1 | · | +1 | +1 | · | · | −1 | · | −1 | · | +1 | | Consumer DiscretionaryXLY | +1 | · | · | +1 | +1 | · | +2 | · | −1 | −1 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | +1 | · | · | · | | IndustrialsXLI | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | · | · | −1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | −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 Industrials +1 broad−based All twelve districts Manufacturing generally increased at a moderate pace. Why it matters: Industrials positive everywhere. | Consumer Discretionary +2 Chicago Consumer spending increased robustly. Why it matters: Strongest Discretionary read. | Real Estate +1 broad−based Broad-based Residential housing demand steady and strong. Why it matters: RE positive in most districts. | Information Technology +1 San Francisco Activity remained strong in information technology. Why it matters: SF carries 47% of IT weight. | Real Estate −1 New York Office availability rose sharply; rents down 8 percent. Why it matters: NY carries large RE weight. | Energy −1 Dallas Energy activity remained depressed. Why it matters: Dallas carries the largest Energy weight. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Continued to improve. |
| New York Growing +0.5 Outlook ▲ Grew slightly. |
| Philadelphia Growing +0.5 Outlook ▲ Incrementally improved. |
| Cleveland Growing +1.0 Outlook ▲ Increased at moderate pace. |
| Richmond Growing +0.5 Outlook ▲ Increased modestly. |
| Atlanta Growing +0.5 Outlook ▲ Improved slightly. |
| Chicago Growing +1.5 Outlook ▲ Increased robustly. |
| St. Louis Growing +0.5 Outlook ▲ Increased slightly. |
| Minneapolis Growing +0.5 Outlook ▶ Grew slightly. |
| Kansas City Growing +0.5 Outlook ▲ Expanded slightly. |
| Dallas Growing +1.0 Outlook ▲ Growth resumed. |
| San Francisco Growing +1.0 Outlook ▲ Expanded moderately. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco +1 at 47% weight lifts weighted IT above the unweighted average.
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| | Energy — Dallas -1 with the largest Energy weight pulls weighted Energy negative despite neutral reads elsewhere.
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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 |