| Sector prospects from the Fed’s regional reports | |
EconomyxAI · Beige Book Sector Monitor August 2025Released September 3, 2025 · Data through August 25 | | | Conditions index +0.01 avg of 11 sectors, −2 to +2 |
| Outlook index −0.55 sectors with an outlook |
| Districts growing 6/12 per National Summary |
| Positive momentum 9/11 sectors improving |
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| This release in brief The read | ■ | Most districts reported little or no change, four grew modestly and several edged down. | | ■ | Consumer spending was flat to declining in most districts as wages lagged prices; households traded down, while Chicago and Richmond consumers were the exceptions. | | ■ | Employment was little changed in eleven districts; firms avoided hiring because of uncertainty and some cited AI and automation. | | ■ | Prices rose modestly to moderately with tariffs pushing input costs; two districts reported strong input price growth and margins compressed in Kansas City. | | ■ | Manufacturing rebounded in Dallas, New York, Philadelphia and Chicago, while it declined in Richmond, Atlanta, Minneapolis and San Francisco; data center demand stayed strong. |
| Sector prospects Where the 3–12 month view points Strongest prospects Financials
XLF
▲ Improving | +0.30 |
| Industrials
XLI
▲ Improving | +0.14 |
| Information Technology
XLK
▶ Steady | +0.06 |
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| Weakest prospects Consumer Discretionary
XLY
▶ Steady | −0.41 |
| Consumer Staples
XLP
▼ Turning down | −0.30 |
| Energy
XLE
▲ Turning up | −0.17 |
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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 | Financials
XLF | | +0.30 | Leaning Favorable | +0.44 | +0.04 | ▲ +0.47 | | 2 | Industrials
XLI | | +0.14 | Neutral | +0.07 | +0.31 | ▲ +0.67 | | 3 | Information Technology
XLK | | +0.06 | Neutral | +0.07 | n/a | ▶ +0.14 | | 4 | Health Care
XLV | | +0.03 | Neutral | +0.09 | n/a | ▶ +0.02 | | 5 | Communication Services
XLC | | +0.02 | Neutral | +0.00 | n/a | ▶ +0.12 | | 6 | Materials
XLB | | −0.04 | Neutral | −0.22 | n/a | ▶ +0.07 | | 7 | Utilities
XLU | | −0.05 | Neutral | +0.00 | n/a | ▶ −0.10 | | 8 | Real Estate
XLRE | | −0.08 | Neutral | −0.08 | −1.00 | ▶ +0.18 | | 9 | Energy
XLE | | −0.17 | Leaning Unfavorable | +0.16 | −0.91 | ▲ +0.66 | | 10 | Consumer Staples
XLP | | −0.30 | Leaning Unfavorable | −0.18 | −1.00 | ▼ −0.43 | | 11 | Consumer Discretionary
XLY | | −0.41 | Leaning Unfavorable | −0.24 | −0.72 | ▶ +0.20 |
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 |
Most districts flat, four grew modestly and several edged down (New York, Atlanta, Minneapolis, San Francisco); a step back from July's slight increase. | Employment flat in eleven districts and down modestly in Kansas City; firms avoided hiring on uncertainty and some used attrition, AI or automation to cut headcount. | | Inflation Pressure (higher = headwind) | | +1.50 |
Prices rose modestly to moderately, two districts reported strong input price growth, tariffs broadly cited and St. Louis contacts expect faster price growth ahead. | New York credit standards eased, Chicago financial conditions loosened and business loan rates fell modestly, Dallas loan pricing declined; offset by Atlanta and Dallas tightening and St. Louis bankers turning selective. | Mixed: Philadelphia expectations broadened, Dallas and Kansas City outlooks improved and Cleveland stayed positive, while New York, St. Louis and San Francisco were slightly pessimistic or weakening. |
| 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 | · | · | · | · | · | · | · | · | · | · | · | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | +1 | · | | FinancialsXLF | · | +1 | −1 | +1 | · | · | +1 | · | · | · | +1 | · | | Consumer DiscretionaryXLY | · | −1 | · | · | +1 | −1 | +1 | · | −1 | · | +1 | −1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | +1 | +1 | · | −1 | −1 | +1 | · | −1 | +1 | +1 | −1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | −1 | · | · | +1 | −1 | | EnergyXLE | · | · | · | · | · | +1 | · | · | · | +1 | · | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | · | +1 | · | −1 | −1 | · | · | · | −1 | · | | MaterialsXLB | · | · | · | · | · | −1 | +1 | · | · | · | · | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
| Top highlights What moved the scores Industrials +1 Dallas Manufacturing rebounded; new orders rose for the first time since January. Why it matters: Dallas is a large Industrials weight; with New York, Philadelphia and Chicago it pulls Industrials up from July's broad negatives. | Industrials −1 Richmond, Atlanta, Minneapolis, San Francisco Manufacturing declined slightly to modestly; Atlanta transportation also fell. Why it matters: Four negative districts, including San Francisco, offset the rebound and keep Industrials near zero. | Consumer Discretionary −1 San Francisco Tourism and hospitality deteriorated further, with fewer international visitors. Why it matters: San Francisco carries a large Discretionary weight; joins New York, Atlanta and Minneapolis on the negative side. | Consumer Discretionary +1 Chicago, Richmond, Dallas Chicago spending up moderately; Richmond autos, boats and tourism up; Dallas retail sales rose. Why it matters: Three positive districts roughly balance four negatives in Discretionary. | Real Estate −1 Dallas Housing market activity remained weak, described by one contact as dismal. Why it matters: Dallas is a large Real Estate weight; outlook also pessimistic. | Real Estate +1 Boston, New York, Cleveland Home sales up moderately (Boston); Class A office rents at record highs (New York). Why it matters: Three Northeast and Midwest positives keep Real Estate conditions slightly positive. |
| Twelve Fed districts District roundup Boston Growing +1.0 Grew slightly; AI-related manufacturing strong, CRE pessimistic. |
| New York Contracting −1.0 Outlook ▼ Declined slightly; outlook slightly pessimistic. |
| Philadelphia Growing +1.0 Outlook ▲ Rose modestly; expectations for growth broadened. |
| Cleveland Growing +1.0 Outlook ▲ Grew slightly; contacts expect activity to increase. |
| Richmond Growing +1.0 Grew modestly, led by consumer spending. |
| Atlanta Contracting −1.0 Outlook ▼ Declined slightly; manufacturing outlook deteriorated. |
| Chicago Growing +1.0 Increased modestly; consumer spending up moderately. |
| St. Louis Flat Outlook ▼ Unchanged; outlook slightly pessimistic but stabilizing. |
| Minneapolis Contracting −1.0 Down slightly; consumer spending and manufacturing softer. |
| Kansas City Flat Outlook ▲ Generally flat; employment down modestly, margins compressed. |
| Dallas Growing +1.0 Outlook ▲ Expanded modestly; manufacturing rebounded, outlooks improved. |
| San Francisco Contracting −1.0 Outlook ▼ Edged down slightly; outlook weakened some. |
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| Where the signal is thin or split Divergences to watch | Industrials — split between rebound districts (Dallas, New York, Philadelphia, Chicago, Kansas City) and declining ones (Richmond, Atlanta, Minneapolis, San Francisco); weighted score near zero hides the split.
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| | Consumer Discretionary — Chicago, Richmond and Dallas positive while San Francisco tourism deteriorated further; trading down to cheaper goods is widespread.
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| | Financials — conditions positive in four districts but loan quality deteriorated in Dallas, Kansas City and St. Louis.
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| | Energy — Atlanta and Kansas City positive on gas demand from LNG and data centers, but Dallas (45% weight) flat with a weak 2026 outlook.
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| | Information Technology — San Francisco scored 0 despite automation and GenAI mentions; a +1 there would add about 0.47 to IT conditions.
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| | UTILITIES and COMMUNICATION SERVICES: no non-zero condition scores; data-center electricity demand noted but not scored for utilities.
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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 |
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