EconomyxAI · Sector Watch August 2022Released September 7, 2022 |
| |
Conditions index −0.04 avg of 11 sectors, −2 to +2 |
| Outlook index −0.23 sectors with an outlook |
| Districts growing 5/12 per National Summary |
| Positive momentum 6/11 sectors improving |
|
|
This release in brief The read | ■ | Released September 7, 2022, with information collected on or before August 26, 2022. | | ■ | Economic activity was unchanged on balance; five districts grew slightly to modestly while five softened slightly to modestly. | | ■ | Consumers traded down toward essentials; home sales fell in all twelve districts; manufacturing grew in several districts. | | ■ | Price levels highly elevated but nine districts saw moderation; lower fuel prices eased freight costs; outlook generally weak. |
|
Sector prospects Where the 3–12 month view points Strongest prospects | Information Technology
XLK
▲ Improving | +0.26 |
| Consumer Staples
XLP
▶ Steady | +0.11 |
|
|
| Weakest prospects Real Estate
XLRE
▶ Steady | −0.84 |
| Consumer Discretionary
XLY
▶ Steady | −0.41 |
| Materials
XLB
▶ Steady | −0.28 |
|
|
|
|
All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
|---|
| 1 | Energy
XLE | | +0.39 | Leaning Favorable | +0.65 | +0.50 | ▶ +0.00 | | 2 | Information Technology
XLK | | +0.26 | Leaning Favorable | +0.47 | +0.00 | ▲ +0.67 | | 3 | Consumer Staples
XLP | | +0.11 | Neutral | +0.33 | +0.00 | ▶ +0.12 | | 4 | Utilities
XLU | | +0.04 | Neutral | +0.13 | +0.00 | ▶ +0.07 | | 5 | Communication Services
XLC | | −0.02 | Neutral | −0.15 | +0.00 | ▲ +0.20 | | 6 | Health Care
XLV | | −0.03 | Neutral | −0.04 | +0.00 | ▶ −0.04 | | 7 | Financials
XLF | | −0.16 | Leaning Unfavorable | −0.05 | −0.50 | ▲ +0.29 | | 8 | Industrials
XLI | | −0.27 | Leaning Unfavorable | −0.03 | −0.50 | ▲ −0.16 | | 9 | Materials
XLB | | −0.28 | Leaning Unfavorable | −0.24 | −0.50 | ▶ +0.03 | | 10 | Consumer Discretionary
XLY | | −0.41 | Leaning Unfavorable | −0.44 | −0.50 | ▶ −0.22 | | 11 | Real Estate
XLRE | | −0.84 | Unfavorable | −1.07 | −1.00 | ▶ −0.54 |
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 unchanged on balance; five districts grew and five softened. | Employment rose modestly to moderately; labor availability improved. | | Inflation Pressure (higher = headwind) | | +1.25 |
Prices highly elevated but nine districts saw moderation. | Loan demand mixed: C&I and cards strong, residential weak. | Outlook generally weak, expecting further softening over six to twelve months. |
|
Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
|---|
| Information TechnologyXLK | · | · | · | · | · | · | · | · | · | · | · | +1 | | Health CareXLV | · | · | · | · | · | · | · | −1 | · | · | · | · | | FinancialsXLF | · | −1 | −1 | · | −1 | +1 | +1 | · | · | · | · | +1 | | Consumer DiscretionaryXLY | · | · | · | −1 | −1 | −1 | −1 | · | · | · | −1 | · | | Communication ServicesXLC | · | −1 | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | −2 | −1 | · | −1 | +1 | −1 | · | · | −1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | +1 | · | · | · | · | · | +1 | | EnergyXLE | · | · | · | · | · | +1 | · | −1 | +1 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | +1 | · | · | · | · | · | · | | Real EstateXLRE | −1 | −1 | −1 | −1 | −1 | −1 | −1 | −1 | −1 | · | −2 | −1 | | MaterialsXLB | · | · | · | · | · | · | −1 | · | · | · | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
|
Top highlights What moved the scores Industrials −2 New York Manufacturing activity fell significantly. Why it matters: Large Industrials weight. | Real Estate −2 Dallas Home prices flat to down; incentives widespread. Why it matters: Large Real Estate weight. | Real Estate −1 broad−based Broad-based Home sales fell in all twelve districts. Why it matters: Real Estate negative everywhere. | Real Estate −1 San Francisco High mortgage rates cooled single-family demand. Why it matters: SF carries large Real Estate weight. | Consumer Discretionary −1 Cleveland, Richmond, Atlanta, Chicago, Dallas Retail softened as households traded down. Why it matters: Broad Discretionary weakness. | Financials −1 New York, Philadelphia, Richmond Loan demand declined; credit tightened. Why it matters: Large Financials weights. |
|
Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▶ Expanded at a modest pace. |
| New York Contracting −1.0 Outlook ▼ Contracted modestly. |
| Philadelphia Flat Outlook ▼ Held steady. |
| Cleveland Flat Outlook ▶ Steadied after slowing. |
| Richmond Contracting −0.5 Outlook ▼ Slowed slightly. |
| Atlanta Growing +0.5 Outlook ▶ Expanded slightly. |
| Chicago Contracting −0.5 Outlook ▼ Decreased modestly. |
| St. Louis Contracting −0.5 Outlook ▼ Declined slightly. |
| Minneapolis Contracting −0.5 Outlook ▶ Slightly lower. |
| Kansas City Growing +0.5 Outlook ▼ Expanded slightly. |
| Dallas Growing +0.5 Outlook ▼ Continued at a modest pace. |
| San Francisco Growing +0.5 Outlook ▶ Expanded modestly. |
|
|
Where the signal is thin or split Divergences to watch | Industrials — New York -2 with a large weight drags the weighted score below the unweighted average.
|
| | Real Estate — Dallas -2 and SF -1 with large weights drive the weighted score well into negative territory.
|
|
|
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 |