EconomyxAI · Sector Watch February 2022Released March 2, 2022 |
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Conditions index +0.21 avg of 11 sectors, −2 to +2 |
| Outlook index +0.25 sectors with an outlook |
| Districts growing 10/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Released March 2, 2022, with information collected on or before February 18, 2022. | | ■ | Economic activity expanded at a modest to moderate pace; New York stalled and St. Louis was unchanged as Omicron disrupted business. | | ■ | Consumer spending weaker than before; manufacturing grew modestly; supply chain issues restrained growth everywhere. | | ■ | Some weakening of financial conditions with loan demand generally unchanged; prices increased at a robust pace. |
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Sector prospects Where the 3–12 month view points Strongest prospects Real Estate
XLRE
▲ Turning up | +0.61 |
| | Industrials
XLI
▶ Steady | +0.39 |
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| Weakest prospects Financials
XLF
▼ Weakening | −0.21 |
| Health Care
XLV
▼ Turning down | −0.17 |
| Consumer Discretionary
XLY
▼ Weakening | −0.07 |
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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 | Real Estate
XLRE | | +0.61 | Favorable | +1.20 | +0.50 | ▲ +0.36 | | 2 | Energy
XLE | | +0.53 | Favorable | +0.69 | +0.72 | ▶ +0.03 | | 3 | Industrials
XLI | | +0.39 | Leaning Favorable | +1.03 | +0.50 | ▶ −0.01 | | 4 | Information Technology
XLK | | +0.09 | Neutral | −0.10 | +0.50 | ▶ −0.39 | | 5 | Materials
XLB | | +0.03 | Neutral | +0.10 | +0.00 | ▶ −0.17 | | 6 | Consumer Staples
XLP | | +0.03 | Neutral | +0.11 | +0.00 | ▶ +0.06 | | 7 | Utilities
XLU | | −0.04 | Neutral | +0.00 | +0.00 | ▶ −0.13 | | 8 | Communication Services
XLC | | −0.05 | Neutral | −0.15 | +0.00 | ▶ −0.07 | | 9 | Consumer Discretionary
XLY | | −0.07 | Neutral | −0.09 | +0.50 | ▼ −0.86 | | 10 | Health Care
XLV | | −0.17 | Leaning Unfavorable | −0.33 | +0.00 | ▼ −0.34 | | 11 | Financials
XLF | | −0.21 | Leaning Unfavorable | −0.17 | +0.00 | ▼ −0.67 |
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 |
Modest to moderate expansion; Omicron and winter weather disrupted activity. | Employment rose modestly to moderately; worker scarcity widespread. | | Inflation Pressure (higher = headwind) | | +1.75 |
Prices charged increased at a robust pace; a few districts reported acceleration. | Some weakening of financial conditions; loan demand generally unchanged. | Outlook stable and generally optimistic, with elevated uncertainty. |
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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 | · | · | · | · | · | · | · | · | · | −1 | | FinancialsXLF | · | −1 | · | +1 | +1 | · | −1 | +1 | · | · | +1 | · | | Consumer DiscretionaryXLY | −1 | −1 | · | −1 | · | · | · | −1 | · | · | −1 | +1 | | Communication ServicesXLC | · | −1 | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | · | +1 | +1 | +1 | +2 | +1 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | +1 | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | +1 | +1 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | +1 | +1 | +1 | +1 | +1 | +1 | +1 | · | +1 | +1 | +2 | | MaterialsXLB | · | · | · | · | · | · | +1 | · | · | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Real Estate +2 San Francisco Residential real estate continued to increase robustly. Why it matters: SF carries large Real Estate weight. | Industrials +2 Atlanta Manufacturing strong; growing port container volumes. Why it matters: Strongest Industrials read. | Industrials +1 broad−based Broad-based Manufacturing continued to grow at a modest pace. Why it matters: Broad Industrials support. | Financials −1 New York, Chicago Finance weakened; asset values declined. Why it matters: Large Financials weights. | Energy +1 Dallas Notable increase in rig count. Why it matters: Dallas carries the largest Energy weight. | Consumer Discretionary −1 Boston, Cleveland, Dallas Omicron hit restaurants; retail softened. Why it matters: Trims Discretionary. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Expanded at a slight to modest pace. |
| New York Flat Outlook ▲ Growth stalled. |
| Philadelphia Growing +0.5 Outlook ▲ Continued to grow modestly. |
| Cleveland Growing +1.0 Outlook ▲ Grew at a slower, more modest pace. |
| Richmond Growing +1.0 Outlook ▲ Grew moderately. |
| Atlanta Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Chicago Growing +1.0 Outlook ▲ Increased moderately. |
| St. Louis Flat Outlook ▲ Remained unchanged. |
| Minneapolis Growing +1.0 Outlook ▲ Increased moderately. |
| Kansas City Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| Dallas Growing +0.5 Outlook ▲ Expansion moderated. |
| San Francisco Growing +1.0 Outlook ▲ Strengthened moderately. |
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Where the signal is thin or split Divergences to watch | Real Estate — San Francisco +2 with the largest Real Estate weight lifts the weighted score above the unweighted average.
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| | Financials — New York and Chicago -1 carry large weights, pulling the weighted score below the unweighted average.
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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 |