EconomyxAI · Sector Watch September 2004Released September 8, 2004 |
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Conditions index +0.33 avg of 11 sectors, −2 to +2 |
| Outlook index +0.19 sectors with an outlook |
| Districts growing 10/12 per National Summary |
| Positive momentum 1/11 sectors improving |
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This release in brief The read | ■ | Released September 8, 2004, with information collected before September 1, 2004. | | ■ | Activity continued to expand in late July and August, though several districts said the pace slowed; growth ranged from slow (St. Louis) to solid (San Francisco). | | ■ | Household spending softened with lackluster retail sales, disappointing back-to-school results in five districts, and some cooling in home sales. | | ■ | Manufacturing improved further nationwide, especially capital equipment, aerospace and IT products, and robust output strained freight capacity. | | ■ | Employers kept adding jobs; wage pressures stayed modest while oil, natural gas, steel, lumber and cement prices rose noticeably. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.59 |
| Materials
XLB
▶ Steady | +0.33 |
| Information Technology
XLK
▶ Steady | +0.17 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | −0.07 |
| Real Estate
XLRE
▼ Turning down | −0.03 |
| Consumer Discretionary
XLY
▼ Weakening | −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 | | +0.59 | Favorable | +0.92 | +0.94 | ▶ −0.15 | | 2 | Materials
XLB | | +0.33 | Leaning Favorable | +0.69 | +0.00 | ▶ −0.06 | | 3 | Information Technology
XLK | | +0.17 | Leaning Favorable | +0.51 | +0.23 | ▶ −0.33 | | 4 | Health Care
XLV | | +0.14 | Neutral | +0.31 | +0.00 | ▶ +0.04 | | 5 | Financials
XLF | | +0.12 | Neutral | +0.33 | +0.50 | ▼ −0.54 | | 6 | Communication Services
XLC | | +0.11 | Neutral | +0.40 | +0.00 | ▶ −0.04 | | 7 | Energy
XLE | | +0.05 | Neutral | +0.16 | +0.05 | ▶ −0.38 | | 8 | Utilities
XLU | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Consumer Discretionary
XLY | | −0.01 | Neutral | −0.04 | +0.41 | ▼ −0.82 | | 10 | Real Estate
XLRE | | −0.03 | Neutral | +0.39 | +0.00 | ▼ −0.69 | | 11 | Consumer Staples
XLP | | −0.07 | Neutral | +0.00 | +0.00 | ▶ −0.08 |
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 |
Continued expansion but several districts slowed; mostly modest or moderate growth. | Continued job gains, uneven across sectors; temp-to-permanent conversions; wage pressure building for skilled workers. | | Inflation Pressure (higher = headwind) | | +0.50 |
Consumer prices flat or up modestly; noticeable increases for oil, natural gas, steel, lumber, cement and processed foods. | Commercial loan demand up in five districts offset softer consumer and mortgage demand; credit quality steady to improved. | No strong forward signal; cooling housing and softer spending balance strong manufacturing. |
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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 | | Health CareXLV | · | · | · | · | · | +1 | · | · | · | · | · | +1 | | FinancialsXLF | · | · | +1 | · | +1 | · | · | · | · | · | +1 | +1 | | Consumer DiscretionaryXLY | +1 | −1 | · | −1 | −1 | · | −1 | · | +1 | +1 | −1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +2 | +1 | · | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | · | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | · | · | −1 | +1 | · | +1 | +1 | · | · | · | +1 | | MaterialsXLB | · | · | · | +1 | · | +1 | +1 | · | +1 | · | +1 | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Consumer Discretionary −1 New York, Cleveland, Richmond, Chicago, Dallas Back-to-school sales below plan; weak spending. Why it matters: Discretionary drag. | Industrials +2 Minneapolis Manufacturing jumped; firms adding shifts. Why it matters: Industrials strength. | Industrials +1 broad−based Broad-based Manufacturing and freight positive in ten districts. Why it matters: Broad Industrials strength. | Consumer Discretionary +1 San Francisco, Boston, Kansas City, Minneapolis Retail strong; tourism up. Why it matters: Partial offset. | Materials +1 Chicago, San Francisco, Minneapolis, Dallas Steel, lumber and chemicals near capacity. Why it matters: Materials positive. | Information Technology +1 San Francisco, Chicago Semiconductor orders rose; IT spending up moderately. Why it matters: IT positive. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Economic activity is increasing. |
| New York Flat Outlook ▶ Some signs of slower growth. |
| Philadelphia Growing +0.5 Outlook ▲ Improved modestly. |
| Cleveland Flat Outlook ▶ Mixed. |
| Richmond Growing +0.5 Outlook ▲ Expanded more modestly. |
| Atlanta Growing +0.5 Outlook ▲ Remained positive, some unevenness. |
| Chicago Growing +0.5 Outlook ▲ Expanded at a slightly slower pace. |
| St. Louis Growing +0.5 Outlook ▲ Continued to improve slowly. |
| Minneapolis Growing +1.0 Outlook ▲ Grew moderately. |
| Kansas City Growing +1.0 Outlook ▲ Expanded moderately. |
| Dallas Growing +0.5 Outlook ▲ Continued to expand. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a solid pace. |
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Where the signal is thin or split Divergences to watch | Consumer Discretionary — four negative readings including New York give the weakest Discretionary reading since early 2003.
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| | Information Technology — Boston software stagnation offsets semiconductor gains, leaving IT barely positive.
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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 |