EconomyxAI · Sector Watch October 2022Released October 19, 2022 |
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Conditions index −0.08 avg of 11 sectors, −2 to +2 |
| Outlook index −0.27 sectors with an outlook |
| Districts growing 6/12 per National Summary |
| Positive momentum 5/11 sectors improving |
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This release in brief The read | ■ | Released October 19, 2022, with information collected on or before October 7, 2022. | | ■ | National activity expanded modestly on net; four districts were flat and two (New York, St. Louis) declined. | | ■ | Retail spending relatively flat; travel and tourism rose strongly; manufacturing steady or expanding as supply disruptions eased. | | ■ | Housing starts and sales weakened further; most districts saw declining loan volumes; outlooks grew more pessimistic. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Utilities
XLU
▶ Steady | +0.02 |
| Consumer Staples
XLP
▶ Steady | +0.01 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | −0.79 |
| Financials
XLF
▼ Turning down | −0.50 |
| Information Technology
XLK
▼ Turning down | −0.27 |
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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 | | +0.44 | Leaning Favorable | +0.71 | +0.55 | ▶ +0.04 | | 2 | Utilities
XLU | | +0.02 | Neutral | +0.13 | +0.00 | ▶ +0.00 | | 3 | Consumer Staples
XLP | | +0.01 | Neutral | +0.16 | +0.00 | ▶ −0.14 | | 4 | Consumer Discretionary
XLY | | −0.01 | Neutral | +0.25 | −0.50 | ▲ +0.71 | | 5 | Communication Services
XLC | | −0.02 | Neutral | −0.15 | +0.00 | ▶ +0.20 | | 6 | Health Care
XLV | | −0.03 | Neutral | −0.04 | +0.00 | ▶ −0.02 | | 7 | Industrials
XLI | | −0.06 | Neutral | +0.12 | −0.50 | ▶ +0.34 | | 8 | Materials
XLB | | −0.27 | Leaning Unfavorable | −0.22 | −0.50 | ▶ +0.07 | | 9 | Information Technology
XLK | | −0.27 | Leaning Unfavorable | +0.03 | −0.50 | ▼ −0.24 | | 10 | Financials
XLF | | −0.50 | Unfavorable | −0.68 | −0.50 | ▼ −0.42 | | 11 | Real Estate
XLRE | | −0.79 | Unfavorable | −1.15 | −1.00 | ▶ −0.09 |
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 |
Activity expanded modestly on net; four districts flat and two declined. | Employment rose modestly to moderately; labor demand cooling with scattered hiring freezes. | | Inflation Pressure (higher = headwind) | | +1.25 |
Price growth elevated with some easing; commodity, fuel and freight declines. | Bankers in most districts cited declines in loan volumes. | Outlooks grew more pessimistic amid concerns about weakening demand. |
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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 | · | · | · | · | | FinancialsXLF | −1 | −1 | +1 | −1 | −1 | +1 | −1 | · | · | −1 | −1 | −1 | | Consumer DiscretionaryXLY | +1 | +1 | −1 | · | · | · | · | −1 | · | +1 | −1 | +1 | | Communication ServicesXLC | · | −1 | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | −1 | −1 | · | · | +1 | −1 | · | +1 | · | +1 | +1 | | Consumer StaplesXLP | · | · | · | +1 | · | +1 | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | · | +2 | +1 | · | | UtilitiesXLU | · | · | · | · | · | +1 | · | · | · | · | · | · | | Real EstateXLRE | −1 | −1 | −1 | −1 | −1 | −1 | −1 | −1 | −1 | −2 | −2 | −1 | | MaterialsXLB | · | · | · | · | · | +1 | −1 | · | · | · | · | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Real Estate −2 Dallas, Kansas City Home sales fell swiftly; outlooks worsened. Why it matters: Strongest Real Estate negatives. | Real Estate −1 broad−based Broad-based Rising rates further weakened single-family starts and sales. Why it matters: Real Estate negative everywhere. | Energy +2 Kansas City Energy activity expanded at a robust pace. Why it matters: Large Energy weight. | Energy +1 Dallas Energy activity continued to expand. Why it matters: Dallas carries the largest Energy weight. | Financials −1 broad−based Broad-based Loan volumes declined; credit standards tightened. Why it matters: Financials negative. | Industrials −1 New York, Philadelphia, Chicago Manufacturing weakened or decreased modestly. Why it matters: Industrials soft. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▼ Up slightly. |
| New York Contracting −1.0 Outlook ▼ Contracted at a modest pace. |
| Philadelphia Flat Outlook ▼ Remained flat. |
| Cleveland Flat Outlook ▼ Generally flat. |
| Richmond Flat Outlook ▼ Little changed. |
| Atlanta Growing +0.5 Outlook ▶ Expanded slightly. |
| Chicago Flat Outlook ▼ Little changed. |
| St. Louis Contracting −0.5 Outlook ▼ Declined slightly. |
| Minneapolis Growing +0.5 Outlook ▶ Expanded slightly. |
| Kansas City Growing +0.5 Outlook ▼ Expanded at a modest pace. |
| Dallas Growing +0.5 Outlook ▼ Modest growth continued. |
| 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 and Kansas City -2 with broad -1 reads produce the weakest Real Estate reading of the cycle.
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| | Financials — broad -1 loan readings across large-weight districts drag the weighted score below zero.
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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 |