EconomyxAI · Beige Book Sector Monitor August 2026Released September 2, 2026 · Data through August 24 |
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Conditions index +0.27 avg of 11 sectors, −2 to +2 |
| Outlook index +0.58 sectors with an outlook |
| Districts growing 10/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | Activity rose modestly, with ten districts growing slightly to moderately and two (Kansas City, San Francisco) flat. | | ■ | Manufacturing broadened: Philadelphia surged, Cleveland stayed robust on data centers and defense, and New York picked up to a moderate pace; manufacturers' outlooks are the strongest in the report. | | ■ | Consumers weakened further outside the high end: spending fell in Cleveland (fourth straight decline), Minneapolis and Kansas City, and price sensitivity limits pass-through. | | ■ | Inflation is still moderate in most districts (St. Louis robust) with input costs elevated on fuel, metals and petrochemicals; housing softened as mortgage rates rose. | | ■ | Banking is a bright spot: Cleveland loan demand grew robustly and Dallas lending expanded across all loan types, though consumer credit quality is slipping. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.59 |
| | Financials
XLF
▼ Turning down | +0.35 |
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| Weakest prospects Real Estate
XLRE
▼ Turning down | −0.18 |
| Health Care
XLV
▶ Steady | −0.08 |
| Consumer Staples
XLP
▶ Steady | −0.03 |
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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 | +0.88 | +1.32 | ▶ −0.22 | | 2 | Energy
XLE | | +0.57 | Favorable | +0.51 | +0.88 | ▶ −0.02 | | 3 | Financials
XLF | | +0.35 | Leaning Favorable | +0.48 | +0.85 | ▼ −0.14 | | 4 | Materials
XLB | | +0.25 | Leaning Favorable | +0.07 | n/a | ▲ +0.10 | | 5 | Utilities
XLU | | +0.22 | Leaning Favorable | +0.25 | +1.00 | ▶ +0.18 | | 6 | Consumer Discretionary
XLY | | +0.20 | Leaning Favorable | +0.31 | +0.39 | ▲ +0.43 | | 7 | Information Technology
XLK | | +0.08 | Neutral | +0.22 | n/a | ▶ −0.06 | | 8 | Communication Services
XLC | | −0.01 | Neutral | +0.00 | n/a | ▶ −0.04 | | 9 | Consumer Staples
XLP | | −0.03 | Neutral | +0.05 | n/a | ▶ +0.14 | | 10 | Health Care
XLV | | −0.08 | Neutral | +0.12 | −0.06 | ▶ −0.14 | | 11 | Real Estate
XLRE | | −0.18 | Leaning Unfavorable | +0.12 | −0.31 | ▼ −0.01 |
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 |
Ten districts grew slightly to moderately and two were flat, a little weaker than July (eleven up, one flat); the national read slipped to 'modestly'. | Seven districts reported gains (three modest, four slight) and five no change, slightly broader than July's five, but employment rose only 'very slightly' and retail and hospitality labor demand fell. | | Inflation Pressure (higher = headwind) | | +1.25 |
Prices rose moderately in eight districts, modestly in two, slightly in one and robustly in one (St. Louis); the pace was the same in eight, slower in three and faster in one, while input costs for energy, transport, metals and petrochemicals stayed notably elevated. Unchanged from July. | Loan volumes were solid or rising in most districts and financial conditions improved slightly, but rising mortgage and financing rates hit housing and autos, Chicago tightened slightly, Atlanta reported much tighter underwriting, and consumer delinquencies crept up in several districts. | The general outlook stayed positive but more mixed than July: Boston grew more pessimistic, New York expects little improvement, Kansas City became more mixed and San Francisco stayed soft, while Cleveland expects moderate growth, St. Louis improved and manufacturers broadly turned more optimistic. |
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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 | · | | Health CareXLV | · | +1 | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | +1 | · | +1 | +2 | · | +1 | · | · | +1 | · | +2 | · | | Consumer DiscretionaryXLY | +1 | +1 | · | −1 | +1 | +1 | · | · | −1 | −1 | +1 | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +2 | +2 | +2 | · | +1 | +1 | +1 | +1 | · | +1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | +1 | · | · | −1 | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | · | · | +1 | · | | UtilitiesXLU | · | · | · | · | · | +1 | · | · | · | +2 | · | · | | Real EstateXLRE | +1 | +2 | · | +1 | −1 | +1 | · | −1 | +1 | −1 | · | −1 | | MaterialsXLB | · | +1 | · | · | · | · | +1 | · | · | · | +1 | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Philadelphia Manufacturing activity surged to a strong increase; about 60% of firms expect higher orders and shipments. Why it matters: Moves from +1 to +2 in both conditions and outlook, a key driver of Industrials' rise. | Industrials +2 Cleveland Demand for manufactured goods grew robustly on data centers and defense; robust growth expected ahead. Why it matters: Strong current and forward reads in a heavily industrial district, repeated from July. | Industrials +2 New York Manufacturing growth picked up to a moderate pace; construction grew strongly; manufacturers optimistic. Why it matters: Third +2 in Industrials, giving the sector the top conditions score. | Financials +2 Cleveland Loan demand grew at a robust pace; one business bank on pace for its best year ever. Why it matters: Cleveland moves from +1 to +2, lifting Financials conditions. | Financials +2 Dallas Loan volume rose across all loan types; bankers expect strong growth in loan demand. Why it matters: Second straight +2 with a +2 outlook, anchoring the sector's outlook score. | Utilities +2 Kansas City Power generation capacity grew robustly; historically strong electricity demand from data centers. Why it matters: The strongest read in a thinly covered sector, moving Utilities up. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▼ Grew slightly; Boston spending strong; outlook more pessimistic on inflation. |
| New York Growing +1.0 Outlook ▶ Increased modestly with manufacturing strength; little improvement expected. |
| Philadelphia Growing +1.0 Outlook ▲ Rose modestly; manufacturing surged; nonmanufacturer expectations below average. |
| Cleveland Growing +1.0 Outlook ▲ Increased modestly; robust manufacturing; consumer spending down fourth period. |
| Richmond Growing +1.5 Expanded moderately; travel and ports grew; other sectors flat to down. |
| Atlanta Growing +1.0 Grew modestly; CRE, manufacturing and energy grew moderately. |
| Chicago Growing +1.0 Outlook ▲ Increased slightly; manufacturing up, business spending down slightly. |
| St. Louis Growing +1.0 Outlook ▲ Modestly increased; prices rose robustly; outlook slightly improved. |
| Minneapolis Growing +1.0 Grew slightly; hiring increased; consumer spending down. |
| Kansas City Flat Outlook ▶ Little change; underlying conditions softened; expectations more mixed. |
| Dallas Growing +1.5 Outlook ▲ Expanded moderately; manufacturing, banking and energy picked up. |
| San Francisco Flat Outlook ▼ Little changed; residential real estate declined; soft outlook. |
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Where the signal is thin or split Divergences to watch | Industrials — conditions and outlook are the strongest in the report, but Richmond, Kansas City and San Francisco (31% of weight combined) are flat, so the weighted score trails the breadth of strong readings.
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| | Financials — Cleveland and Dallas at +2 with strong outlooks, but New York (28% weight) and San Francisco (16%) are flat, and rising consumer delinquencies temper the read.
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| | Consumer Discretionary — K-shaped; high-end travel and Boston/New York tourism are strong while Cleveland, Minneapolis and Kansas City declined; San Francisco (26% weight) flat.
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| | Real Estate — New York's strong commercial market contrasts with residential declines in four districts as mortgage rates rose; outlooks lean negative.
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| | Utilities — Kansas City's +2 on data center power demand is the main read; coverage is otherwise thin.
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| | COMMUNICATION SERVICES and IT: thin coverage; IT scored only where AI and semiconductor demand was explicit, San Francisco (47% weight) flat; no outlook given for IT, Comm Services, Staples or Materials.
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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 |