EconomyxAI · Sector Watch January 2025Released January 15, 2025 · Data through January 6 |
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Conditions index +0.22 avg of 11 sectors, −2 to +2 |
| Outlook index +0.35 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 0/11 sectors improving |
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This release in brief The read | ■ | Activity rose slightly to moderately in all twelve districts, led by strong holiday spending. | | ■ | Consumers carried the period: Dallas retail grew robustly and New York, Richmond and Atlanta reported moderate gains, though lower-income households look stretched. | | ■ | Manufacturing slipped slightly on net and construction fell; some firms stockpiled inventory ahead of expected tariffs. | | ■ | Lending firmed: Dallas loan volume accelerated sharply, Chicago financial conditions loosened, and New York credit standards eased for the first time in a while. | | ■ | Outlooks were more optimistic than pessimistic, with manufacturers expecting a pickup in 2025, but immigration and tariff policy were frequently cited risks. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Discretionary
XLY
▶ No history | +0.73 |
| Financials
XLF
▶ No history | +0.54 |
| Real Estate
XLRE
▶ No history | +0.48 |
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| Weakest prospects Energy
XLE
▶ No history | −0.38 |
| Communication Services
XLC
▶ No history | −0.02 |
| Materials
XLB
▶ No history | +0.01 |
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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 | | +0.73 | Favorable | +1.40 | +0.76 | ▶ – | | 2 | Financials
XLF | | +0.54 | Favorable | +0.13 | +1.09 | ▶ – | | 3 | Real Estate
XLRE | | +0.48 | Leaning Favorable | +0.38 | +0.81 | ▶ – | | 4 | Information Technology
XLK | | +0.31 | Leaning Favorable | +0.51 | +0.08 | ▶ – | | 5 | Industrials
XLI | | +0.14 | Neutral | −0.37 | +0.69 | ▶ – | | 6 | Health Care
XLV | | +0.09 | Neutral | +0.36 | −1.00 | ▶ – | | 7 | Utilities
XLU | | +0.08 | Neutral | +0.13 | +1.00 | ▶ – | | 8 | Consumer Staples
XLP | | +0.01 | Neutral | +0.05 | n/a | ▶ – | | 9 | Materials
XLB | | +0.01 | Neutral | −0.10 | n/a | ▶ – | | 10 | Communication Services
XLC | | −0.02 | Neutral | −0.07 | n/a | ▶ – | | 11 | Energy
XLE | | −0.38 | Leaning Unfavorable | −0.04 | −0.64 | ▶ – |
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 |
All twelve districts grew, mostly slightly, with Dallas moderate; consumer spending rose moderately while manufacturing and construction declined. | Six districts reported slight job gains and six no change; layoffs were rare, but some firms were less certain about future staffing. | | Inflation Pressure (higher = headwind) | | +0.75 |
Prices rose modestly, ranging from flat to moderate, with fuel and some food inputs cheaper; firms expect further increases in 2025, partly from tariffs. | Mixed: Chicago financial conditions loosened, New York credit standards eased and lending grew modestly, but high mortgage and financing costs held back housing and construction and Dallas credit kept tightening. | More contacts were optimistic than pessimistic about 2025; Kansas City and Cleveland expected acceleration, San Francisco's outlook worsened slightly, and policy uncertainty was widespread. |
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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 | +1 | · | +1 | +1 | | FinancialsXLF | · | −1 | · | +1 | +1 | +1 | +1 | · | · | · | +2 | · | | Consumer DiscretionaryXLY | +1 | +2 | +1 | +1 | +2 | +2 | +1 | +1 | +1 | +1 | +2 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | −1 | · | | IndustrialsXLI | · | −1 | −1 | · | −1 | −1 | −1 | +1 | −1 | −1 | +1 | · | | Consumer StaplesXLP | · | · | +1 | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | · | −1 | · | · | | UtilitiesXLU | · | · | · | · | · | +1 | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | · | +1 | · | +1 | · | · | +1 | · | · | · | | MaterialsXLB | · | · | · | · | · | · | −1 | · | · | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Consumer Discretionary +2 broad−based New York, Richmond, Atlanta, Dallas Holiday sales stronger than expected; Dallas retail sales grew robustly; NYC tourism matched 2019. Why it matters: Four districts at +2 and the rest at +1 make Consumer Discretionary the strongest conditions sector. | Information Technology +1 San Francisco Demand strengthened for capital equipment as customers invested in automation. Why it matters: San Francisco carries 47% of IT weight; this one read adds about 0.47 to the weighted IT score. | Financials +2 Dallas Loan volume accelerated sharply in December; bankers expect rapid improvement. Why it matters: Only +2 in Financials, with a +2 outlook; it offsets New York's slight contraction. | Financials −1 New York Broad finance sector contracted slightly; demand declined for all loan types. Why it matters: New York carries 28% of Financials weight, pulling the weighted score down. | Industrials +1 outlook Boston, New York, Cleveland, Minneapolis, Kansas City, Dallas Manufacturers generally expect demand to improve in the first half of 2025. Why it matters: Broad positive outlook against negative current conditions lifts the Industrials prospect score. | Industrials −1 Minneapolis, Chicago, New York Minneapolis orders 'falling dramatically'; NY manufacturing declined moderately. Why it matters: Seven districts negative on manufacturing keep Industrials conditions below zero. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Increased slightly; tourism and home sales up modestly, otherwise flat. |
| New York Growing +1.0 Outlook ▲ Increased slightly; strong holiday sales, manufacturing declined moderately. |
| Philadelphia Growing +1.0 Outlook ▲ Grew slightly; manufacturing edged down, firms expect moderate growth. |
| Cleveland Growing +1.0 Outlook ▲ Grew modestly; strong retail, soft manufacturing, further growth expected. |
| Richmond Growing +1.0 Outlook ▶ Grew modestly; holiday spending moderate, manufacturing slowed slightly. |
| Atlanta Growing +1.0 Expanded modestly; consumer and travel moderate, manufacturing declined. |
| Chicago Growing +1.0 Outlook ▲ Increased slightly; consumer up, manufacturing and business spending down. |
| St. Louis Growing +1.0 Outlook ▲ Expanded slightly; holiday sales better than expected. |
| Minneapolis Growing +1.0 Outlook ▲ Grew slightly; retail upbeat, manufacturing contracted moderately. |
| Kansas City Growing +1.0 Outlook ▲ Expanded slightly, led by consumers; growth expected to accelerate. |
| Dallas Growing +2.0 Outlook ▲ Expanded moderately; manufacturing resumed growth, loans surged. |
| San Francisco Growing +1.0 Outlook ▼ Expanded slightly; retail up modestly, outlook worsened slightly. |
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Where the signal is thin or split Divergences to watch | Information Technology — weighted (+0.47 from SF and Dallas) is well above the unweighted average (~0.1) because San Francisco carries 47% of the weight on a single automation sentence.
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| | Financials — Dallas (+2, 7% weight) and New York (-1, 28% weight) offset each other; outlook is broadly positive.
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| | Industrials — conditions negative in seven districts but outlook positive in six, a classic 'weak now, improving' setup.
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| | Energy — conditions roughly flat, but the Dallas outlook (45% weight) is negative on lower oil price expectations.
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| | COMMUNICATION SERVICES and UTILITIES: thin coverage; one district each. Outlook coverage below minimum.
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| | Momentum — none, since this is the first release in the history.
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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 |