EconomyxAI · Beige Book Sector Monitor January 2023Released January 18, 2023 |
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Conditions index −0.18 avg of 11 sectors, −2 to +2 |
| Outlook index −0.14 sectors with an outlook |
| Districts growing 5/12 per National Summary |
| Positive momentum 5/11 sectors improving |
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This release in brief The read | ■ | Released January 18, 2023, with information collected on or before January 9, 2023. | | ■ | Overall activity relatively unchanged; five districts up slightly or modestly, six flat or down slightly, and New York down significantly. | | ■ | Consumer spending up slightly with healthy holiday sales in places; tourism moderate to robust; manufacturing declined modestly. | | ■ | Housing continued to weaken; office market softening; higher borrowing costs dampening lending; energy up moderately. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Information Technology
XLK
▲ Turning up | +0.09 |
| Communication Services
XLC
▶ Steady | +0.00 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | −0.74 |
| Financials
XLF
▶ Steady | −0.32 |
| Consumer Discretionary
XLY
▼ Turning down | −0.30 |
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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 | Energy
XLE | | +0.23 | Leaning Favorable | +0.35 | +0.50 | ▶ −0.30 | | 2 | Information Technology
XLK | | +0.09 | Neutral | +0.08 | +0.00 | ▲ +0.40 | | 3 | Communication Services
XLC | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.07 | | 4 | Health Care
XLV | | −0.00 | Neutral | +0.00 | +0.00 | ▶ +0.02 | | 5 | Consumer Staples
XLP | | −0.02 | Neutral | +0.00 | +0.00 | ▶ −0.08 | | 6 | Utilities
XLU | | −0.03 | Neutral | +0.00 | +0.00 | ▶ −0.07 | | 7 | Materials
XLB | | −0.13 | Neutral | −0.26 | +0.00 | ▶ −0.05 | | 8 | Industrials
XLI | | −0.18 | Leaning Unfavorable | −0.43 | +0.00 | ▼ −0.53 | | 9 | Consumer Discretionary
XLY | | −0.30 | Leaning Unfavorable | −0.05 | −0.50 | ▼ −0.33 | | 10 | Financials
XLF | | −0.32 | Leaning Unfavorable | −0.54 | −0.50 | ▶ +0.17 | | 11 | Real Estate
XLRE | | −0.74 | Unfavorable | −1.17 | −1.00 | ▶ +0.10 |
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 relatively unchanged; five up, six flat or down slightly, one down significantly. | Employment grew modestly to moderately; firms reluctant to lay off; wage pressures easing in places. | | Inflation Pressure (higher = headwind) | | +0.75 |
Selling prices up modestly or moderately at a slowing pace; freight and commodity costs easing. | Mortgage demand weak; higher borrowing costs dampening commercial lending. | Contacts generally expected little growth in the months ahead. |
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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 | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | −1 | −1 | +1 | −1 | −1 | · | −1 | · | −1 | −1 | −2 | +1 | | Consumer DiscretionaryXLY | +1 | · | −1 | −1 | +1 | +1 | · | −1 | +1 | −1 | −1 | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | −2 | −1 | · | −1 | −1 | −1 | −1 | · | · | +1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | · | −1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | −1 | −1 | −1 | −2 | −1 | −1 | −1 | −1 | −1 | −2 | −1 | | MaterialsXLB | −1 | · | · | −1 | · | · | −1 | · | −1 | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Real Estate −2 Richmond, Dallas Home sales and prices fell further; CRE slowed moderately. Why it matters: Strongest Real Estate negatives. | Real Estate −1 broad−based Broad-based Housing markets continued to weaken. Why it matters: Real Estate negative everywhere. | Financials −2 Dallas Loan volumes declined for the third period in a row. Why it matters: Dallas carries a sizable weight. | Financials −1 broad−based Broad-based Higher borrowing costs dampened commercial lending. Why it matters: Financials negative. | Industrials −2 New York Especially sharp decline in manufacturing. Why it matters: Large NY weight. | Industrials −1 Philadelphia, Richmond, Atlanta, Chicago, St. Louis New orders fell; transportation weakened. Why it matters: Broad Industrials drag. |
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Twelve Fed districts District roundup Boston Flat Outlook ▶ Roughly flat. |
| New York Contracting −2.0 Outlook ▼ Contracted, sharp manufacturing decline. |
| Philadelphia Contracting −0.5 Outlook ▼ Declined slightly. |
| Cleveland Contracting −0.5 Outlook ▼ Slowed slightly. |
| Richmond Growing +0.5 Outlook ▶ Grew at a slight pace. |
| Atlanta Growing +0.5 Outlook ▶ Grew at a gradual pace. |
| Chicago Contracting −0.5 Outlook ▼ Decreased slightly. |
| St. Louis Flat Outlook ▼ Unchanged. |
| Minneapolis Growing +0.5 Outlook ▶ Expanded slightly. |
| Kansas City Contracting −0.5 Outlook ▲ Declined slightly. |
| Dallas Growing +0.5 Outlook ▼ Modest growth continued. |
| San Francisco Growing +0.5 Outlook ▶ Expanded modestly. |
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Where the signal is thin or split Divergences to watch | Industrials — New York -2 and broad -1 manufacturing and transport reads pull Industrials negative.
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| | Real Estate — remains the weakest sector with broad -1 and two -2 reads.
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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 |