EconomyxAI · Sector Watch October 2023Released October 18, 2023 |
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Conditions index −0.22 avg of 11 sectors, −2 to +2 |
| Outlook index −0.14 sectors with an outlook |
| Districts growing 5/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Released October 18, 2023, with information collected on or before October 6, 2023. | | ■ | Most districts reported little to no change in activity since the September report. | | ■ | Consumer spending mixed; tourism continued to improve; manufacturing mixed with an improving outlook. | | ■ | Loan demand declined slightly to modestly; real estate little changed with low inventory; outlook stable or slightly weaker. |
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Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▲ Improving | +0.30 |
| Health Care
XLV
▶ Steady | +0.08 |
| Utilities
XLU
▶ Steady | −0.03 |
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| Weakest prospects Financials
XLF
▶ Steady | −0.48 |
| Real Estate
XLRE
▼ Weakening | −0.39 |
| Consumer Discretionary
XLY
▼ Turning down | −0.31 |
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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 | | +0.30 | Leaning Favorable | +0.35 | +0.00 | ▲ +0.89 | | 2 | Health Care
XLV | | +0.08 | Neutral | +0.17 | +0.00 | ▶ +0.17 | | 3 | Utilities
XLU | | −0.03 | Neutral | +0.00 | +0.00 | ▶ −0.07 | | 4 | Consumer Staples
XLP | | −0.06 | Neutral | −0.04 | +0.00 | ▶ −0.20 | | 5 | Industrials
XLI | | −0.10 | Neutral | −0.40 | +0.00 | ▶ +0.12 | | 6 | Materials
XLB | | −0.11 | Neutral | −0.23 | +0.00 | ▶ −0.18 | | 7 | Communication Services
XLC | | −0.21 | Leaning Unfavorable | −0.40 | +0.00 | ▼ −0.39 | | 8 | Information Technology
XLK | | −0.28 | Leaning Unfavorable | −0.57 | +0.00 | ▼ −0.48 | | 9 | Consumer Discretionary
XLY | | −0.31 | Leaning Unfavorable | −0.14 | −0.50 | ▼ −0.16 | | 10 | Real Estate
XLRE | | −0.39 | Leaning Unfavorable | −0.37 | −0.50 | ▼ −0.28 | | 11 | Financials
XLF | | −0.48 | Leaning Unfavorable | −0.83 | −0.50 | ▶ −0.17 |
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 |
Most districts reported little to no change in activity. | Labor market tightness eased; employment up slightly to moderately. | | Inflation Pressure (higher = headwind) | | +0.50 |
Prices continued to increase at a modest pace; firms struggled to pass costs. | Slight to modest declines in loan demand; delinquencies low but rising. | Near-term outlook stable or slightly weaker. |
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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 | +1 | · | | FinancialsXLF | −1 | −1 | +1 | −1 | −1 | · | −1 | · | −1 | · | −2 | −1 | | Consumer DiscretionaryXLY | +1 | · | −1 | −1 | · | · | · | · | +1 | · | −1 | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | −1 | | IndustrialsXLI | · | −1 | −1 | +1 | −1 | −1 | −1 | −1 | −1 | −1 | +1 | · | | Consumer StaplesXLP | · | · | · | · | +1 | −1 | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | · | −1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | +1 | · | · | −1 | · | −1 | · | −1 | −1 | · | −1 | | MaterialsXLB | · | · | · | · | · | −1 | · | −1 | · | · | +1 | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Financials −2 Dallas Loan demand decline accelerated. Why it matters: Strongest Financials negative. | Financials −1 broad−based Broad-based Loan demand declined; standards tightened. Why it matters: Financials negative. | Industrials −1 broad−based New York, Philadelphia, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City Manufacturing edged down; freight weak. Why it matters: Industrials negative. | Industrials +1 Cleveland, Dallas Manufacturing uptick and rebound. Why it matters: Partial offset. | Real Estate −1 broad−based Broad-based High rates kept home sales and CRE weak. Why it matters: Real Estate negative. | Real Estate +1 New York Office vacancy rates declined. Why it matters: Partial offset. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▶ Expanded slightly. |
| New York Contracting −1.0 Outlook ▼ Weakened modestly. |
| Philadelphia Contracting −0.5 Outlook ▶ Continued to decline slightly. |
| Cleveland Flat Outlook ▶ Little changed. |
| Richmond Contracting −0.5 Outlook ▼ Contracted slightly. |
| Atlanta Growing +0.5 Outlook ▶ Grew slowly. |
| Chicago Growing +0.5 Outlook ▼ Up modestly. |
| St. Louis Flat Outlook ▼ Unchanged. |
| Minneapolis Growing +0.5 Outlook ▼ Increased slightly. |
| Kansas City Contracting −0.5 Outlook ▶ Softened slightly. |
| Dallas Growing +0.5 Outlook ▼ Modest expansion continued. |
| San Francisco Flat Outlook ▶ Stable on net. |
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Where the signal is thin or split Divergences to watch | Financials — Dallas -2 and broad -1 reads keep Financials weak despite stable credit quality.
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| | Industrials — broad -1 freight and manufacturing reads outweigh Cleveland and Dallas rebounds.
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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 |