EconomyxAI · Sector Watch July 2022Released July 13, 2022 |
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Conditions index −0.20 avg of 11 sectors, −2 to +2 |
| Outlook index −0.22 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 July 13, 2022, with information collected on or before July 1, 2022. | | ■ | Economic activity expanded at a modest pace, but several districts saw growing signs of slowing demand and five cited recession risk; Cleveland declined slightly. | | ■ | Consumer spending moderated as food and gas prices squeezed budgets; leisure travel healthy; manufacturing mixed. | | ■ | Housing demand weakened noticeably on affordability; energy demand robust with drilling up; outlook mostly negative. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Consumer Staples
XLP
▶ Steady | +0.10 |
| Utilities
XLU
▶ Steady | +0.05 |
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| Weakest prospects Real Estate
XLRE
▼ Weakening | −1.05 |
| Industrials
XLI
▼ Weakening | −0.64 |
| Consumer Discretionary
XLY
▼ Weakening | −0.60 |
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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 | | +0.45 | Leaning Favorable | +0.69 | +0.55 | ▶ +0.08 | | 2 | Consumer Staples
XLP | | +0.10 | Neutral | +0.26 | +0.00 | ▶ +0.18 | | 3 | Utilities
XLU | | +0.05 | Neutral | +0.13 | +0.00 | ▶ +0.13 | | 4 | Information Technology
XLK | | −0.01 | Neutral | +0.07 | +0.00 | ▲ −0.04 | | 5 | Health Care
XLV | | −0.02 | Neutral | +0.00 | +0.00 | ▶ −0.04 | | 6 | Communication Services
XLC | | −0.28 | Leaning Unfavorable | −0.55 | +0.00 | ▼ −0.47 | | 7 | Materials
XLB | | −0.39 | Leaning Unfavorable | −0.34 | −0.50 | ▶ −0.41 | | 8 | Financials
XLF | | −0.45 | Leaning Unfavorable | −0.46 | −0.50 | ▶ −0.46 | | 9 | Consumer Discretionary
XLY | | −0.60 | Unfavorable | −0.49 | −0.50 | ▼ −1.06 | | 10 | Industrials
XLI | | −0.64 | Unfavorable | −0.42 | −0.50 | ▼ −1.35 | | 11 | Real Estate
XLRE | | −1.05 | Unfavorable | −1.05 | −1.00 | ▼ −1.56 |
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 | | +0.25 |
Modest growth on balance, with growing signs of slowing demand; Cleveland declined. | Employment rose modestly to moderately; labor availability improved modestly. | | Inflation Pressure (higher = headwind) | | +1.50 |
Substantial price increases everywhere; construction input prices moderated. | Loan demand mixed; residential lending weakened amid higher rates. | Outlook mostly negative; five districts noted increased recession risk. |
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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 | · | · | · | · | · | · | · | · | · | · | · | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | −1 | · | −1 | −1 | +1 | −1 | +1 | · | −1 | −1 | · | | Consumer DiscretionaryXLY | · | −1 | −1 | −1 | · | +1 | · | +1 | −1 | −1 | −1 | −1 | | Communication ServicesXLC | · | −1 | · | · | · | · | · | · | · | · | · | −1 | | IndustrialsXLI | · | · | −1 | −1 | −1 | +1 | −1 | · | · | −1 | −1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | +1 | · | · | +1 | | EnergyXLE | · | · | · | · | · | +1 | · | −1 | · | +2 | +1 | · | | UtilitiesXLU | · | · | · | · | · | +1 | · | · | · | · | · | · | | Real EstateXLRE | −1 | −1 | −1 | −1 | · | −1 | −1 | −1 | −1 | −1 | −2 | −1 | | MaterialsXLB | · | · | · | −1 | · | +1 | −1 | −1 | · | · | · | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Real Estate −2 Dallas Housing conditions eroded more quickly than anticipated. Why it matters: Large Real Estate weight. | Real Estate −1 San Francisco Residential real estate eased; permits weakened. Why it matters: SF carries large Real Estate weight. | Real Estate −1 broad−based Broad-based Housing demand weakened noticeably on affordability. Why it matters: Real Estate negative nearly everywhere. | Energy +2 Kansas City Energy activity increased at a solid pace. Why it matters: Large Energy weight. | Energy +1 Dallas Rig count rose; production increased. Why it matters: Dallas carries the largest Energy weight. | Industrials −1 Dallas, Philadelphia, Cleveland, Richmond Manufacturing slowed sharply or declined. Why it matters: Broad Industrials weakness. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▼ Expanded at a modest pace. |
| New York Flat Outlook ▼ Slowed to a crawl. |
| Philadelphia Growing +0.5 Outlook ▼ Continued to grow slightly. |
| Cleveland Contracting −0.5 Outlook ▼ Declined slightly. |
| Richmond Growing +0.5 Outlook ▶ Grew modestly, signs of slowing. |
| Atlanta Growing +0.5 Outlook ▶ Grew modestly. |
| Chicago Growing +0.5 Outlook ▼ Increased slightly. |
| St. Louis Growing +0.5 Outlook ▶ Improved at a modest pace. |
| Minneapolis Growing +0.5 Outlook ▶ Grew modestly. |
| Kansas City Growing +0.5 Outlook ▶ Slowed to a modest pace. |
| Dallas Growing +0.5 Outlook ▼ Slowed to a modest pace. |
| San Francisco Growing +0.5 Outlook ▼ Expanded modestly. |
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Where the signal is thin or split Divergences to watch | Real Estate — Dallas -2 and SF -1 with the largest weights push the weighted Real Estate score sharply negative.
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| | Energy — Kansas City +2 and Dallas +1 keep the weighted score positive despite a soft broader economy.
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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 |