EconomyxAI · Sector Watch September 1999Released September 22, 1999 · Data through September 13 |
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Conditions index +0.46 avg of 11 sectors, −2 to +2 |
| Outlook index +0.13 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | The economy remained strong, with moderate-to-brisk growth in all districts. | | ■ | Back-to-school sales met or beat expectations in most districts, though Atlanta saw August weakness and Kansas City and New York were flat or mixed. | | ■ | Manufacturing accelerated almost everywhere, with steel near 90% capacity in Chicago and semiconductors strong in Boston, Dallas and Minneapolis on improving Asian demand. | | ■ | Housing stayed at high levels but slowed on higher mortgage rates, while commercial real estate stayed tight. | | ■ | Materials prices rose significantly; drilling kept rising in Dallas and Kansas City as oil topped $21, while Minneapolis rigs stayed below a year ago. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.50 |
| Energy
XLE
▲ Improving | +0.47 |
| Financials
XLF
▲ Improving | +0.45 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | −0.08 |
| Utilities
XLU
▶ Steady | −0.02 |
| Health Care
XLV
▶ Steady | +0.11 |
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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 | | +0.50 | Favorable | +0.90 | −0.29 | ▶ +0.22 | | 2 | Energy
XLE | | +0.47 | Leaning Favorable | +0.49 | +0.50 | ▲ +0.43 | | 3 | Financials
XLF | | +0.45 | Leaning Favorable | +0.81 | n/a | ▲ +0.42 | | 4 | Information Technology
XLK | | +0.39 | Leaning Favorable | +0.66 | n/a | ▶ −0.01 | | 5 | Materials
XLB | | +0.38 | Leaning Favorable | +0.25 | n/a | ▶ +0.13 | | 6 | Consumer Discretionary
XLY | | +0.32 | Leaning Favorable | +0.76 | +0.55 | ▶ −0.39 | | 7 | Communication Services
XLC | | +0.20 | Leaning Favorable | +0.40 | n/a | ▶ −0.04 | | 8 | Real Estate
XLRE | | +0.20 | Leaning Favorable | +0.82 | −0.24 | ▶ −0.36 | | 9 | Health Care
XLV | | +0.11 | Neutral | +0.00 | n/a | ▶ −0.18 | | 10 | Utilities
XLU | | −0.02 | Neutral | +0.00 | n/a | ▶ −0.10 | | 11 | Consumer Staples
XLP | | −0.08 | Neutral | −0.05 | n/a | ▶ −0.13 |
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 |
All districts reported strong activity with moderate-to-brisk growth; Dallas accelerated slightly, while Richmond slipped a notch and Kansas City kept slowing from a high level. | Labor markets stayed very tight with widespread shortages, but a few districts noted some slackening and wage acceleration remained scattered. | | Inflation Pressure (higher = headwind) | | +0.75 |
Materials prices rose significantly, including Cleveland steel up 5-7%, paper up 6-10% in Dallas and plywood up over 50% in Minneapolis; Atlanta and Dallas reported more increases than declines, though retail prices stayed flat. | Loan demand sustained except residential mortgages; Chicago business lending strong, Kansas City banks raised prime, Philadelphia and St. Louis softer. | Two-thirds of San Francisco respondents expect regional growth to outpace the nation and Dallas contacts were optimistic, but Boston expects slowing in early 2000 and two-thirds of San Francisco contacts expect housing starts to slow. |
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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 | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | +1 | · | +1 | +1 | +1 | +1 | · | · | +1 | +1 | +1 | | Consumer DiscretionaryXLY | +1 | · | +1 | +2 | · | · | +1 | +2 | +1 | · | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | +1 | +1 | +1 | +1 | · | +1 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | −1 | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | −1 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +2 | +1 | +1 | · | · | +1 | +1 | +2 | · | · | +1 | | MaterialsXLB | · | · | · | +1 | · | · | +1 | · | −1 | · | +1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy +1 Dallas Drilling activity continued to rise, though mostly low-risk onshore gas wells. Why it matters: Dallas carries the largest Energy weight; moving from 0 to +1 flips the sector positive. | Information Technology +1 San Francisco East Asian demand picked up for electronic components and machinery. Why it matters: San Francisco is about 47% of IT; a sixth straight +1 keeps IT favorable. | Real Estate +2 New York New York City housing 'unbelievably strong' despite tight supply. Why it matters: New York carries large Real Estate weight. | Industrials +1 broad−based Eleven districts Manufacturing accelerated almost everywhere; 'full speed ahead' in Minneapolis. Why it matters: Breadth lifts Industrials to its best reading of the year. | Consumer Discretionary +2 Cleveland, St. Louis Retail exceptional; car sales up more than 10% with SUV demand outstripping supply. Why it matters: Two +2s offset flat sales in New York, Atlanta and Kansas City. | Energy +1 Kansas City Rig count up 9% in August and 26% above the March low. Why it matters: Confirms the Energy rebound outside Dallas. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▶ Expanding moderately; outlook more cautious. |
| New York Growing +1.0 Moderate growth; manufacturing accelerated. |
| Philadelphia Growing +1.0 Outlook ▲ Improving moderately. |
| Cleveland Growing +2.0 Sustained strength. |
| Richmond Growing +1.0 Growth slipped a notch. |
| Atlanta Growing +1.0 Outlook ▲ Very high level, moderate expansion. |
| Chicago Growing +1.0 Expanded moderately despite housing slowdown. |
| St. Louis Growing +2.0 Outlook ▲ Continues to exhibit strong growth. |
| Minneapolis Growing +1.0 Activity continues to rise. |
| Kansas City Growing +1.0 Outlook ▲ Growth continued to slow from a high level. |
| Dallas Growing +1.0 Outlook ▲ Expanded at a slightly faster rate. |
| San Francisco Growing +2.0 Outlook ▲ Continued strong economic conditions. |
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Where the signal is thin or split Divergences to watch | Industrials — eleven +1s, the broadest manufacturing reading of the year, but no +2 reads.
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| | Energy — Kansas City and Dallas both +1 for the first time in the series; weighted Energy turns positive because Dallas dominates the weights.
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| | Real Estate — only two +2 reads as housing slows on higher mortgage rates; four districts now at 0.
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| | Financials — weighted above unweighted as New York and San Francisco are both +1.
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| | UTILITIES and HEALTH CARE: no directional coverage this release.
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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 |