EconomyxAI · Sector Watch May 2023Released May 31, 2023 |
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Conditions index −0.15 avg of 11 sectors, −2 to +2 |
| Outlook index −0.36 sectors with an outlook |
| Districts growing 4/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | Released May 31, 2023, with information collected on or before May 22, 2023. | | ■ | Activity little changed overall; four districts reported small increases, six no change and two slight to moderate declines. | | ■ | Consumer spending steady or higher with leisure and hospitality growth; manufacturing flat to up; trucking in a freight recession. | | ■ | Residential real estate picked up despite low inventories; commercial real estate and office weak; consumer loan delinquencies rising. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Discretionary
XLY
▲ Turning up | +0.05 |
| Consumer Staples
XLP
▶ Steady | +0.04 |
| Utilities
XLU
▶ Steady | −0.01 |
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| Weakest prospects Financials
XLF
▶ Steady | −0.82 |
| Energy
XLE
▼ Turning down | −0.43 |
| Information Technology
XLK
▼ Turning down | −0.40 |
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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 | | +0.05 | Neutral | +0.60 | −0.50 | ▲ +0.44 | | 2 | Consumer Staples
XLP | | +0.04 | Neutral | +0.11 | +0.00 | ▶ +0.08 | | 3 | Utilities
XLU | | −0.01 | Neutral | +0.04 | +0.00 | ▶ −0.03 | | 4 | Communication Services
XLC | | −0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 5 | Health Care
XLV | | −0.03 | Neutral | +0.00 | +0.00 | ▶ −0.10 | | 6 | Materials
XLB | | −0.14 | Neutral | +0.04 | −0.50 | ▲ +0.20 | | 7 | Real Estate
XLRE | | −0.18 | Leaning Unfavorable | −0.07 | −0.50 | ▶ +0.42 | | 8 | Industrials
XLI | | −0.30 | Leaning Unfavorable | −0.21 | −0.50 | ▶ −0.01 | | 9 | Information Technology
XLK | | −0.40 | Leaning Unfavorable | −0.54 | −0.50 | ▼ −0.16 | | 10 | Energy
XLE | | −0.43 | Leaning Unfavorable | −0.51 | −0.50 | ▼ −0.47 | | 11 | Financials
XLF | | −0.82 | Unfavorable | −1.11 | −1.00 | ▶ −0.39 |
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 little changed; four up slightly, six unchanged, two declined. | Employment increased at a slower pace; labor market cooled some. | | Inflation Pressure (higher = headwind) | | +0.75 |
Prices rose moderately with the rate of increase slowing in many districts. | Financial conditions stable or tighter; consumer loan delinquencies rising. | Expectations deteriorated a little but contacts still expected further expansion. |
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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 | · | · | · | · | · | · | · | −1 | · | +1 | · | · | | FinancialsXLF | −1 | −2 | −1 | −1 | −1 | · | −1 | · | · | · | −1 | −1 | | Consumer DiscretionaryXLY | +1 | +1 | · | · | · | · | · | · | +1 | +1 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | −1 | −1 | · | −1 | −1 | −1 | +1 | · | · | · | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | +1 | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | −1 | · | · | −1 | −1 | · | | UtilitiesXLU | · | · | · | · | · | +1 | −1 | · | · | · | · | · | | Real EstateXLRE | · | +1 | · | · | +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 Financials −2 New York Finance sector conditions continued to worsen. Why it matters: NY carries the largest Financials weight. | Financials −1 broad−based Broad-based Loan demand softened; standards tightened. Why it matters: Financials negative. | Consumer Discretionary +1 broad−based Boston, New York, Minneapolis, Kansas City, Dallas, San Francisco Leisure and hospitality spending grew. Why it matters: Lifts Discretionary. | Real Estate +1 New York, Richmond, Atlanta Residential sales market strong; spring market off to a good start. Why it matters: Real Estate improving. | Real Estate −1 Chicago, Minneapolis, San Francisco, Kansas City Residential activity decreased; refinancing difficult. Why it matters: Offsets Real Estate. | Industrials −1 Richmond, Atlanta, Chicago, New York, Philadelphia Freight recession; manufacturing weak. Why it matters: Industrials drag. |
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Twelve Fed districts District roundup Boston Flat Outlook ▲ About flat. |
| New York Contracting −1.0 Outlook ▼ Declined at a moderate pace. |
| Philadelphia Contracting −0.5 Outlook ▲ Continued to decline slightly. |
| Cleveland Flat Outlook ▶ Little change. |
| Richmond Flat Outlook ▶ Little changed. |
| Atlanta Growing +0.5 Outlook ▶ Grew at a slow pace. |
| Chicago Flat Outlook ▼ Little changed. |
| St. Louis Flat Outlook ▼ Unchanged. |
| Minneapolis Growing +0.5 Outlook ▲ Increased slightly. |
| Kansas City Flat Outlook ▼ Changed little. |
| Dallas Growing +0.5 Outlook ▼ Modest growth continued. |
| San Francisco Growing +0.5 Outlook ▶ Expanded somewhat. |
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Where the signal is thin or split Divergences to watch | Financials — New York -2 with broad -1 reads keep Financials the weakest sector.
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| | Real Estate — residential recovery in eastern districts lifts Real Estate toward neutral for the first time since early 2022.
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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 |