EconomyxAI · Beige Book Sector Monitor May 2025Released June 4, 2025 · Data through May 23 |
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Conditions index −0.16 avg of 11 sectors, −2 to +2 |
| Outlook index −0.44 sectors with an outlook |
| Districts growing 3/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | Activity declined slightly, with six districts down, three flat and three growing slightly. | | ■ | Every district reported tariffs pushing up costs; firms expect faster price increases and plan to pass them on within three months, while some absorb costs in margins. | | ■ | Consumers were cautious: Kansas City retail fell significantly and travel weakened, although pull-forward buying lifted autos and big-ticket goods in Chicago and New York. | | ■ | Labor demand fell in every district through fewer hours, hiring pauses and contingency layoff plans, but layoffs were not pervasive. | | ■ | The outlook stayed slightly pessimistic overall; Philadelphia manufacturers' expectations jumped while New York and Dallas worsened. |
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Sector prospects Where the 3–12 month view points Strongest prospects Health Care
XLV
▶ Steady | +0.10 |
| Utilities
XLU
▶ Steady | +0.09 |
| Consumer Staples
XLP
▶ Steady | −0.02 |
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| Weakest prospects Energy
XLE
▼ Turning down | −0.75 |
| Consumer Discretionary
XLY
▶ Steady | −0.58 |
| Industrials
XLI
▼ Weakening | −0.52 |
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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 | Health Care
XLV | | +0.10 | Neutral | +0.14 | −1.00 | ▶ +0.17 | | 2 | Utilities
XLU | | +0.09 | Neutral | +0.19 | +1.00 | ▶ +0.06 | | 3 | Consumer Staples
XLP | | −0.02 | Neutral | +0.17 | n/a | ▶ +0.00 | | 4 | Materials
XLB | | −0.06 | Neutral | −0.12 | n/a | ▶ +0.00 | | 5 | Information Technology
XLK | | −0.14 | Neutral | −0.10 | n/a | ▶ −0.10 | | 6 | Communication Services
XLC | | −0.15 | Neutral | −0.15 | n/a | ▶ −0.07 | | 7 | Financials
XLF | | −0.23 | Leaning Unfavorable | −0.22 | −0.33 | ▶ −0.06 | | 8 | Real Estate
XLRE | | −0.29 | Leaning Unfavorable | −0.20 | −0.44 | ▶ −0.02 | | 9 | Industrials
XLI | | −0.52 | Unfavorable | −0.61 | −0.35 | ▼ −0.52 | | 10 | Consumer Discretionary
XLY | | −0.58 | Unfavorable | −0.42 | −0.95 | ▶ +0.07 | | 11 | Energy
XLE | | −0.75 | Unfavorable | −0.45 | −1.00 | ▼ −1.01 |
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 |
Declined slightly: six districts reported slight to moderate declines (Kansas City moderate), three no change and three slight growth. Weaker than April. | Employment flat in most districts (three up, two down), but every district described lower labor demand through fewer hours, hiring pauses and staff reduction plans. | | Inflation Pressure (higher = headwind) | | +1.50 |
Prices rose moderately, but tariffs raised costs in every district, Cleveland input costs grew robustly, New York manufacturing input prices surged at the fastest pace in years, and firms widely expect faster increases. | Mixed: Chicago financial conditions loosened as equities rose sharply and New York standards kept easing, but Atlanta loan balances fell with tighter commercial standards and Dallas tightening continued; mortgage rates stabilized. | Slightly pessimistic and uncertain, unchanged from April: Philadelphia and San Francisco improved, while New York became quite pessimistic and Dallas and St. Louis deteriorated. |
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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 | · | · | · | · | · | +1 | · | · | · | +1 | · | · | | FinancialsXLF | · | −1 | +1 | · | · | −1 | +1 | · | · | · | · | · | | Consumer DiscretionaryXLY | −1 | +1 | · | · | +1 | −1 | +1 | · | −1 | −2 | −1 | −1 | | Communication ServicesXLC | · | −1 | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | −1 | −1 | −1 | · | −1 | −1 | −1 | +1 | · | · | −1 | | Consumer StaplesXLP | · | · | · | · | · | · | +1 | · | · | +1 | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | −1 | · | −1 | · | | UtilitiesXLU | · | · | · | · | · | +1 | · | · | · | +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 Consumer Discretionary −2 Kansas City Spending declined significantly across apparel, electronics and furniture. Why it matters: Only -2 in the release; part of a broad discretionary weakening. | Consumer Discretionary −1 outlook Boston, New York, Cleveland, Richmond, Atlanta, Kansas City, Dallas Retailers expect a drop in sales when tariff-related price increases are enacted. Why it matters: Seven negative outlooks make Discretionary's outlook the weakest of any well-covered sector. | Industrials +2 outlook Philadelphia Manufacturers' expectations for growth over the next six months jumped sharply in May. Why it matters: The only +2 outlook; offsets part of the broad negative manufacturing outlook. | Industrials −1 New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, San Francisco Manufacturing declined slightly to moderately after first-quarter front-loading. Why it matters: Seven negative districts, including San Francisco (17% weight), keep Industrials conditions below zero. | Financials +1 Chicago, Philadelphia Financial conditions loosened as equities rose sharply; Philadelphia lending increased. Why it matters: Offsets New York (28% weight) and Atlanta declines, leaving Financials near zero. | Energy −1 Dallas Oil and gas activity eased; E&P firms expect deeper capex cuts in the second half. Why it matters: Dallas carries 45% of Energy weight, pulling Energy conditions and outlook negative. |
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Twelve Fed districts District roundup Boston Contracting −1.0 Outlook ▶ Decreased slightly; retail and restaurant sales slowed modestly. |
| New York Contracting −1.0 Outlook ▼ Declined modestly; capital spending plans fell, outlook quite pessimistic. |
| Philadelphia Contracting −1.0 Outlook ▲ Declined modestly; manufacturers' expectations rose moderately. |
| Cleveland Flat Outlook ▶ Flat; consumers pulled back and manufacturers saw softer orders. |
| Richmond Growing +1.0 Outlook ▼ Grew mildly; ports surged on import front-loading. |
| Atlanta Growing +1.0 Grew slightly; manufacturing fell, energy rose slowly. |
| Chicago Growing +1.0 Outlook ▼ Increased slightly; consumers up modestly, slight decline expected next year. |
| St. Louis Flat Outlook ▼ Unchanged; outlook slightly deteriorated. |
| Minneapolis Contracting −1.0 Outlook ▼ Contracted slightly; manufacturing up moderately, spending fell. |
| Kansas City Contracting −2.0 Outlook ▼ Declined moderately on retail, housing and manufacturing. |
| Dallas Flat Outlook ▼ Little changed; outlooks deteriorated on tariff uncertainty. |
| San Francisco Contracting −1.0 Outlook ▼ Slowed slightly; outlook slightly more positive but downtrodden. |
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Where the signal is thin or split Divergences to watch | Industrials — conditions negative in seven districts, but Philadelphia's sharp jump in expectations and Minneapolis's moderate growth keep the outlook from being uniformly negative.
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| | Consumer Discretionary — positive reads in New York, Chicago and Richmond reflect pull-forward buying; outlook negative in seven of eight districts.
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| | UTILITIES vs ENERGY: power demand strong (Atlanta, Kansas City) while oil and gas activity eased (Dallas, Minneapolis).
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| | Health Care — conditions slightly positive on hiring and supplies, but the only outlooks are negative on federal funding cuts.
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| | Information Technology — no outlook coverage; only New York's information sector decline registers.
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| | Communication Services — thin coverage; only New York.
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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 |