EconomyxAI · Sector Watch April 2023Released April 19, 2023 |
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Conditions index −0.23 avg of 11 sectors, −2 to +2 |
| Outlook index −0.36 sectors with an outlook |
| Districts growing 4/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Released April 19, 2023, with information collected on or before April 10, 2023. | | ■ | Overall activity little changed; nine districts reported no or slight change and three modest growth. | | ■ | Consumer spending flat to down slightly; travel and tourism picked up; manufacturing flat or down; freight flat to down. | | ■ | Lending volumes and loan demand declined; banks tightened standards amid liquidity concerns after recent bank failures. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Staples
XLP
▶ Steady | −0.01 |
| Communication Services
XLC
▶ Steady | −0.02 |
| Utilities
XLU
▶ Steady | −0.04 |
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| Weakest prospects Financials
XLF
▼ Turning down | −0.96 |
| Materials
XLB
▼ Turning down | −0.39 |
| Real Estate
XLRE
▲ Improving | −0.38 |
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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 Staples
XLP | | −0.01 | Neutral | +0.00 | +0.00 | ▶ −0.03 | | 2 | Communication Services
XLC | | −0.02 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 3 | Utilities
XLU | | −0.04 | Neutral | +0.00 | +0.00 | ▶ −0.07 | | 4 | Energy
XLE | | −0.05 | Neutral | −0.04 | +0.00 | ▶ −0.20 | | 5 | Health Care
XLV | | −0.06 | Neutral | −0.05 | +0.00 | ▼ −0.17 | | 6 | Industrials
XLI | | −0.21 | Leaning Unfavorable | −0.26 | −0.50 | ▶ +0.02 | | 7 | Information Technology
XLK | | −0.22 | Leaning Unfavorable | −0.12 | −0.50 | ▲ +0.16 | | 8 | Consumer Discretionary
XLY | | −0.31 | Leaning Unfavorable | −0.09 | −0.50 | ▼ −0.27 | | 9 | Real Estate
XLRE | | −0.38 | Leaning Unfavorable | −0.29 | −1.00 | ▲ +0.64 | | 10 | Materials
XLB | | −0.39 | Leaning Unfavorable | −0.42 | −0.50 | ▼ −0.34 | | 11 | Financials
XLF | | −0.96 | Unfavorable | −1.24 | −1.00 | ▼ −0.87 |
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 | | +0.00 |
Activity little changed; nine districts no or slight change, three modest growth. | Employment growth moderated; labor market less tight with better retention. | | Inflation Pressure (higher = headwind) | | +0.75 |
Prices rose moderately but the pace appeared to be slowing; freight costs much lower. | Loan demand declined broadly; banks tightened standards amid liquidity concerns. | Expectations mostly unchanged; two districts saw outlooks deteriorate. |
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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 | −2 | −1 | · | −1 | +1 | −1 | · | · | −1 | −2 | −2 | | Consumer DiscretionaryXLY | +1 | +1 | −1 | · | · | +1 | · | · | · | −1 | · | −1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | +1 | −1 | · | −1 | −1 | −1 | · | −1 | · | +1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | · | −1 | · | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | +1 | −1 | −1 | −1 | +1 | · | · | −1 | −2 | · | −1 | | MaterialsXLB | · | · | · | · | · | −1 | −1 | · | · | · | · | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Financials −2 New York Finance sector deteriorated sharply amid banking stress. Why it matters: NY carries the largest Financials weight. | Financials −2 San Francisco Lending activity decreased substantially. Why it matters: Large Financials weight. | Financials −2 Dallas Credit standards and terms tightened sharply. Why it matters: Adds to Financials drag. | Real Estate −2 Kansas City CRE development lending almost completely unavailable. Why it matters: Strongest Real Estate negative. | Real Estate +1 New York, Atlanta Home sales picked up; housing demand improved. Why it matters: Partial offset. | Industrials −1 broad−based Philadelphia, Richmond, Atlanta, Chicago, Minneapolis, Boston New orders and freight fell. Why it matters: Industrials negative. |
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Twelve Fed districts District roundup Boston Flat Outlook ▼ Roughly even. |
| New York Flat Outlook ▶ Little changed; finance deteriorated sharply. |
| Philadelphia Contracting −0.5 Outlook ▼ Declined slightly. |
| Cleveland Flat Outlook ▶ Generally flat. |
| Richmond Contracting −0.5 Outlook ▼ Contracted slightly. |
| Atlanta Growing +0.5 Outlook ▶ Grew modestly. |
| Chicago Flat Outlook ▼ Little changed. |
| St. Louis Flat Outlook ▶ Unchanged. |
| Minneapolis Growing +0.5 Outlook ▶ Grew slightly. |
| Kansas City Contracting −0.5 Outlook ▼ Declined slightly. |
| Dallas Growing +0.5 Outlook ▼ Modest growth continued. |
| San Francisco Growing +0.5 Outlook ▼ Expanded slightly. |
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Where the signal is thin or split Divergences to watch | Financials — three -2 reads in large-weight districts (NY, SF, Dallas) make Financials the weakest sector on banking stress.
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| | Industrials — broad -1 manufacturing and freight reads offset by NY and Dallas gains.
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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 |