EconomyxAI · Beige Book Sector Monitor September 1998Released September 16, 1998 · Data through September 8 |
| |
Conditions index +0.12 avg of 11 sectors, −2 to +2 |
| Outlook index −0.42 sectors with an outlook |
| Districts growing 8/12 per National Summary |
| Positive momentum 2/11 sectors improving |
|
|
This release in brief The read | ■ | The economy kept expanding at a moderate pace, but growth slowed in several districts. | | ■ | New York reported significant segments slowing and Dallas decelerated as manufacturing declined; Richmond's growth moderated. | | ■ | Expectations deteriorated sharply in Philadelphia, Atlanta, St. Louis and San Francisco, and Minneapolis called the number of worried sources 'striking'. | | ■ | Construction and real estate stayed very strong, while energy drilling kept falling with Texas rig counts down a third from a year ago. | | ■ | Wages rose faster, but retail prices were steady or falling and commodity prices were lower on Asian weakness and steel imports. |
|
Sector prospects Where the 3–12 month view points Strongest prospects Consumer Discretionary
XLY
▲ Turning up | +0.49 |
| Real Estate
XLRE
▶ Steady | +0.30 |
| Communication Services
XLC
▶ Steady | +0.26 |
|
|
| Weakest prospects Energy
XLE
▼ Turning down | −0.91 |
| Information Technology
XLK
▼ Turning down | −0.44 |
| Materials
XLB
▶ Steady | −0.27 |
|
|
|
|
All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
|---|
| 1 | Consumer Discretionary
XLY | | +0.49 | Leaning Favorable | +0.94 | +0.46 | ▲ +0.19 | | 2 | Real Estate
XLRE | | +0.30 | Leaning Favorable | +1.28 | −0.39 | ▶ −0.01 | | 3 | Communication Services
XLC | | +0.26 | Leaning Favorable | +0.40 | n/a | ▶ +0.00 | | 4 | Consumer Staples
XLP | | +0.18 | Leaning Favorable | +0.22 | n/a | ▶ +0.18 | | 5 | Health Care
XLV | | +0.11 | Neutral | +0.08 | n/a | ▶ −0.01 | | 6 | Utilities
XLU | | −0.01 | Neutral | +0.00 | n/a | ▶ −0.06 | | 7 | Industrials
XLI | | −0.23 | Leaning Unfavorable | +0.23 | −0.59 | ▶ −0.28 | | 8 | Financials
XLF | | −0.24 | Leaning Unfavorable | +0.09 | n/a | ▼ −0.76 | | 9 | Materials
XLB | | −0.27 | Leaning Unfavorable | −0.30 | −0.50 | ▶ −0.06 | | 10 | Information Technology
XLK | | −0.44 | Leaning Unfavorable | −0.55 | −0.50 | ▼ −0.22 | | 11 | Energy
XLE | | −0.91 | Unfavorable | −1.06 | −1.00 | ▼ −0.52 |
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 | | +0.75 |
Most districts still expanded at a moderate pace, but New York, Richmond and Dallas reported slowing and manufacturing weakened in several districts. | Labor markets stayed tight and wages rose faster; Boston temp firms up 10-20% with the best pricing in a year, though Manpower in St. Louis expected labor demand to taper. | | Inflation Pressure (higher = headwind) | | −0.25 |
Retail prices were steady or falling, commodity and steel prices fell on imports and Asia, and Dallas described prices as deflationary; only wages and a few services rose. | Loan demand was mixed: brisk in Richmond and strong in San Francisco, but declining in New York and Philadelphia, slowing in Chicago, and C&I down in St. Louis; some banks tightened. | Expectations deteriorated sharply in Philadelphia, Atlanta, St. Louis and San Francisco; Boston saw more uncertainty about 1999 and Minneapolis sentiment was very guarded. |
|
Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
|---|
| Information TechnologyXLK | · | · | · | · | · | · | · | +1 | · | · | −1 | −1 | | Health CareXLV | +1 | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | +1 | −1 | −1 | +1 | +1 | +1 | · | · | · | · | · | +1 | | Consumer DiscretionaryXLY | +1 | · | · | +1 | −1 | +1 | · | +1 | +2 | +1 | +1 | +2 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | −1 | · | +1 | · | · | +1 | +1 | +1 | +1 | −1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | +1 | | EnergyXLE | · | · | · | · | · | · | · | · | −1 | −1 | −2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | +2 | · | +1 | +1 | · | +2 | +1 | +2 | +1 | +1 | +2 | | MaterialsXLB | · | · | −1 | −1 | · | · | −1 | +1 | · | · | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
|
Top highlights What moved the scores Energy −2 Dallas Rig count down 22%, Texas down a third; significant layoffs expected. Why it matters: Dallas carries the largest Energy weight; a -2 sinks the sector. | Financials −1 New York Loan demand decreased, possibly seasonal. Why it matters: New York is about 28% of Financials, so its -1 swings the weighted score. | Information Technology −1 San Francisco High-tech weakened with layoffs; Y2K investment high but slowing. Why it matters: San Francisco is about 47% of IT weight; a -1 turns IT negative. | Real Estate +2 broad−based New York, Chicago, Minneapolis, San Francisco Manhattan Class A rents up about 20%; record existing-home sales pace in Chicago. Why it matters: Four +2 reads keep Real Estate the top sector. | Consumer Discretionary +2 San Francisco, Minneapolis Retail and services rapid; an electronics retailer expects 'mindblowing' earnings. Why it matters: San Francisco's large weight at +2 lifts Discretionary. | Industrials −1 Dallas, New York Manufacturing declined in Dallas and weakened in New York. Why it matters: Two sizable districts negative cut Industrials. |
|
Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▼ Growing; more uncertainty about 1999. |
| New York Flat Significant segments slowing. |
| Philadelphia Flat Outlook ▼ Mixed; slower growth expected. |
| Cleveland Growing +1.0 Business remained strong. |
| Richmond Flat Outlook ▼ Growth moderated. |
| Atlanta Growing +1.0 Outlook ▼ Modest expansion, weaker outlook. |
| Chicago Growing +1.0 Modest expansion, more mixed reports. |
| St. Louis Growing +1.0 Outlook ▲ Economy remained quite healthy. |
| Minneapolis Growing +1.0 Outlook ▼ Moderate to strong; sentiment very guarded. |
| Kansas City Growing +1.0 Outlook ▼ Moderate growth continued. |
| Dallas Flat Outlook ▼ Activity decelerated as manufacturing declined. |
| San Francisco Growing +1.0 Outlook ▼ Moderate growth, tempered outlook. |
|
|
Where the signal is thin or split Divergences to watch | Energy — Dallas at -2 and Kansas City and Minneapolis at -1 make Energy the weakest sector; weighted is far below unweighted because Dallas dominates.
|
| | Information Technology — San Francisco and Dallas both -1 push weighted IT negative even though most districts are 0.
|
| | Financials — New York at -1 pulls weighted Financials down relative to the broad +1s elsewhere.
|
| | Real Estate — four +2 reads keep it the strongest sector, though outlooks point to softening.
|
| | UTILITIES and CONSUMER STAPLES: thin coverage; Staples has only San Francisco's supermarket pickup.
|
|
|
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 |