EconomyxAI · Sector Watch January 2024Released January 17, 2024 |
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Conditions index −0.12 avg of 11 sectors, −2 to +2 |
| Outlook index +0.00 sectors with an outlook |
| Districts growing 5/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released January 17, 2024, with information collected on or before January 8, 2024. | | ■ | A majority of districts reported little or no change; three reported modest growth and one a moderate decline. | | ■ | Holiday spending met or exceeded expectations; leisure travel increased; nearly all districts reported manufacturing declines. | | ■ | High rates limited autos and real estate, but the prospect of falling rates lifted optimism; expectations improved. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Discretionary
XLY
▲ Turning up | +0.32 |
| Communication Services
XLC
▶ Steady | +0.05 |
| Materials
XLB
▶ Steady | +0.04 |
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| Weakest prospects Industrials
XLI
▼ Turning down | −0.28 |
| Information Technology
XLK
▼ Turning down | −0.12 |
| Real Estate
XLRE
▲ Turning up | −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 | Consumer Discretionary
XLY | | +0.32 | Leaning Favorable | +0.53 | +0.00 | ▲ +0.77 | | 2 | Communication Services
XLC | | +0.05 | Neutral | +0.00 | +0.00 | ▶ +0.20 | | 3 | Materials
XLB | | +0.04 | Neutral | −0.03 | +0.00 | ▶ +0.15 | | 4 | Utilities
XLU | | +0.04 | Neutral | +0.13 | +0.00 | ▶ +0.04 | | 5 | Consumer Staples
XLP | | −0.01 | Neutral | +0.00 | +0.00 | ▶ −0.01 | | 6 | Energy
XLE | | −0.01 | Neutral | +0.06 | +0.00 | ▶ −0.20 | | 7 | Health Care
XLV | | −0.02 | Neutral | +0.00 | +0.00 | ▶ −0.09 | | 8 | Financials
XLF | | −0.03 | Neutral | −0.42 | +0.00 | ▲ +0.39 | | 9 | Real Estate
XLRE | | −0.03 | Neutral | −0.47 | +0.00 | ▲ +0.21 | | 10 | Information Technology
XLK | | −0.12 | Neutral | −0.40 | +0.00 | ▼ −0.08 | | 11 | Industrials
XLI | | −0.28 | Leaning Unfavorable | −0.69 | +0.00 | ▼ −0.30 |
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 |
Majority of districts little or no change; three modest growth, one moderate decline. | Seven districts little or no net change in employment; labor market cooling. | | Inflation Pressure (higher = headwind) | | +0.50 |
Slight or modest price increases in most districts; input prices steady or falling. | High rates limiting deals; loan demand stabilizing in places. | Expectations positive or improved, with falling rates a source of optimism. |
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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 | · | · | | Consumer DiscretionaryXLY | +1 | +1 | · | +1 | +1 | · | +1 | · | +1 | −2 | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | −2 | −1 | +1 | −1 | −1 | −1 | · | −1 | · | · | −1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | · | · | · | · | | UtilitiesXLU | · | · | · | · | · | +1 | · | · | · | · | · | · | | Real EstateXLRE | −1 | · | · | +1 | · | −1 | · | · | −1 | −1 | · | −1 | | MaterialsXLB | · | · | · | +1 | · | · | −1 | · | · | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials −2 New York Manufacturing activity contracted sharply. Why it matters: Large NY weight. | Industrials −1 broad−based Broad-based Nearly all districts reported manufacturing declines. Why it matters: Industrials negative. | Consumer Discretionary +1 broad−based New York, Boston, Cleveland, Richmond, Minneapolis, San Francisco, Chicago Holiday spending met or beat expectations. Why it matters: Lifts Discretionary. | Consumer Discretionary −2 Kansas City Durable goods sales declined robustly. Why it matters: Partial offset. | Financials −1 New York, Richmond, Kansas City Loan demand declined across segments. Why it matters: Financials negative. | Financials +1 Philadelphia Credit card volumes surged. Why it matters: Partial offset. |
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Twelve Fed districts District roundup Boston Contracting −0.5 Outlook ▲ Down slightly. |
| New York Contracting −0.5 Outlook ▲ Declined slightly. |
| Philadelphia Flat Outlook ▲ Held steady. |
| Cleveland Growing +0.5 Outlook ▲ Edged up. |
| Richmond Growing +0.5 Outlook ▶ Grew mildly. |
| Atlanta Growing +0.5 Outlook ▲ Grew at a slow pace. |
| Chicago Growing +0.5 Outlook ▼ Up modestly. |
| St. Louis Flat Outlook ▲ Unchanged. |
| Minneapolis Contracting −0.5 Outlook ▲ Down slightly. |
| Kansas City Contracting −1.0 Outlook ▲ Declined moderately. |
| Dallas Growing +0.5 Outlook ▼ Expanded at a modest pace. |
| San Francisco Flat Outlook ▶ Stable overall. |
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Where the signal is thin or split Divergences to watch | Consumer Discretionary — broad holiday strength outweighs Kansas City -2.
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| | Industrials — New York -2 with near-universal -1 reads keeps Industrials the weakest sector.
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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 |