EconomyxAI · Beige Book Sector Monitor September 1997Released September 17, 1997 · Data through September 8 |
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Conditions index +0.64 avg of 11 sectors, −2 to +2 |
| Outlook index +0.58 sectors with an outlook |
| Districts growing 11/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Activity expanded in all twelve districts and about half said the pace picked up in July and August; San Francisco reported vigorous activity. | | ■ | Retail sales grew at a fairly moderate pace, very strongly in Minneapolis and San Francisco and above expectations in Chicago and Dallas; back-to-school apparel and tourism were very strong. | | ■ | Manufacturing was high and rising, with durables especially strong: computers and business equipment, metals, machine tools, aircraft and heavy equipment; steel mills struggled to build inventories. | | ■ | Commercial real estate was strong with falling vacancies but few rent increases; lending rose in most districts, mainly commercial and mortgage loans, while consumer lending softened. | | ■ | Labor markets were tight almost everywhere but two-thirds of districts saw no general wage acceleration, goods prices barely moved, and the U.S. rig count topped 1,000 for the first time since 1991. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Discretionary
XLY
▲ Improving | +0.92 |
| Industrials
XLI
▲ Turning up | +0.72 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | −0.09 |
| Utilities
XLU
▶ Steady | +0.02 |
| Health Care
XLV
▶ Steady | +0.07 |
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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 | Consumer Discretionary
XLY | | +0.92 | Favorable | +1.29 | +0.84 | ▲ +0.83 | | 2 | Industrials
XLI | | +0.72 | Favorable | +1.28 | +0.92 | ▲ +0.28 | | 3 | Energy
XLE | | +0.65 | Favorable | +1.12 | +0.50 | ▶ +0.03 | | 4 | Real Estate
XLRE | | +0.55 | Favorable | +1.16 | +0.23 | ▲ +0.36 | | 5 | Information Technology
XLK | | +0.44 | Leaning Favorable | +0.70 | +0.50 | ▲ +0.55 | | 6 | Communication Services
XLC | | +0.34 | Leaning Favorable | +0.40 | n/a | ▲ +0.20 | | 7 | Materials
XLB | | +0.29 | Leaning Favorable | +0.39 | n/a | ▶ −0.12 | | 8 | Financials
XLF | | +0.21 | Leaning Favorable | +0.72 | +0.50 | ▶ −0.04 | | 9 | Health Care
XLV | | +0.07 | Neutral | +0.00 | n/a | ▶ −0.07 | | 10 | Utilities
XLU | | +0.02 | Neutral | +0.00 | n/a | ▶ +0.00 | | 11 | Consumer Staples
XLP | | −0.09 | Neutral | +0.00 | n/a | ▶ −0.03 |
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 | | +1.25 |
Activity expanded in all twelve districts and about half said the pace picked up in July and August; San Francisco reported vigorous activity and St. Louis an acceleration, while Cleveland was stable at a high level. | Most regions had tight labor markets, recruiting difficulties or growing shortages; Midwest firms reported their strongest fourth-quarter hiring plans since 1978, though two-thirds of districts saw no general wage acceleration. | | Inflation Pressure (higher = headwind) | | +0.25 |
Goods prices moved very little at the manufacturing and retail levels; energy prices rose on tight supplies in Dallas and some metals and packaging costs rose, while food and dairy prices fell in San Francisco. | Overall lending rose in most districts, mainly commercial loans and mortgages; New York loan rates declined across categories and San Francisco banking strengthened, while several districts tightened standards. | San Francisco respondents expect somewhat faster national growth, with more above-trend forecasts than any survey this year; Dallas, St. Louis and Boston contacts are optimistic and Minneapolis is upbeat. |
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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 | · | · | +1 | · | · | +1 | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | +1 | +1 | +1 | −1 | +1 | · | +1 | +1 | · | +1 | · | +1 | | Consumer DiscretionaryXLY | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +2 | +1 | +1 | +2 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | +1 | +1 | · | +1 | +1 | +2 | +1 | +2 | +1 | +1 | +2 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | +1 | +1 | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | +1 | · | +1 | +1 | +1 | · | +1 | · | +1 | +2 | | MaterialsXLB | · | · | · | · | · | +1 | +1 | +1 | · | · | +1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Chicago, Minneapolis, San Francisco Manufacturers' orders swelling; durable output expanding rapidly; steel mills can't build inventory. Why it matters: Three +2s across 35% of Industrials weight. | Consumer Discretionary +2 Minneapolis, San Francisco Mall managers call spending 'phenomenal'; sales growing at a 'solid clip'. Why it matters: San Francisco is 26% of Discretionary; every district non-negative. | Energy +2 Dallas U.S. rig count exceeded 1,000 for the first time since the Persian Gulf War. Why it matters: Dallas carries 45% of Energy weight; margins also strong. | Information Technology +1 broad San Francisco, Boston, Richmond, Minneapolis Rising demand for computer equipment; business equipment among fastest-growing lines. Why it matters: San Francisco back at +1 (47%) turns IT up after two flat releases. | Real Estate +2 San Francisco Real estate markets and construction 'continued to surge'. Why it matters: San Francisco is 27% of Real Estate weight. | Industrials outlook +1 Boston, Chicago, St. Louis, Dallas, San Francisco No contacts detect deterioration; strongest Midwest hiring plans since 1978. Why it matters: Forward-looking support for Industrials. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Continues to expand steadily. |
| New York Growing +1.0 Expanding at a steady pace. |
| Philadelphia Growing +1.0 Increased moderately in August. |
| Cleveland Flat Generally stable at a high level. |
| Richmond Growing +1.0 Outlook ▲ Pace picked up; manufacturing quickened. |
| Atlanta Growing +1.0 Outlook ▲ Growth remains moderate. |
| Chicago Growing +1.0 Outlook ▲ Expanded at a slightly higher rate. |
| St. Louis Growing +1.0 Outlook ▲ Growth appears to have accelerated somewhat. |
| Minneapolis Growing +1.0 Outlook ▲ Mood upbeat; orders swelling. |
| Kansas City Growing +1.0 Outlook ▲ Continued to grow moderately. |
| Dallas Growing +1.0 Outlook ▲ Expanded; contacts optimistic for the year. |
| San Francisco Growing +2.0 Outlook ▲ Vigorous economic activity. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco returns to +1 (47% weight), lifting weighted IT sharply from the summer.
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| | Consumer Discretionary — San Francisco +2 at 26% weight pushes weighted Discretionary above the unweighted average.
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| | Industrials — three +2s including San Francisco and Chicago (31% combined) give the year's strongest weighted Industrials read.
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| | Financials — New York +1 (28%) and no district below -1 keep weighted Financials positive.
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| | HEALTH CARE, STAPLES and UTILITIES: no directional coverage.
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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 |