EconomyxAI · Beige Book Sector Monitor October 2025Released October 15, 2025 · Data through October 6 |
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Conditions index −0.11 avg of 11 sectors, −2 to +2 |
| Outlook index −0.06 sectors with an outlook |
| Districts growing 3/12 per National Summary |
| Positive momentum 5/11 sectors improving |
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This release in brief The read | ■ | Activity changed little on balance, with three districts growing, five flat and four softening slightly. | | ■ | Consumer spending inched down, apart from an EV rush before the tax credit expired; lower- and middle-income households sought discounts while higher-income travel stayed strong. | | ■ | Employment was stable but more employers cut head counts through layoffs and attrition, some citing AI; health insurance costs pushed labor costs up. | | ■ | Prices rose further and input costs accelerated in several districts; tariff pass-through varied, while weak demand pushed down steel and lumber prices. | | ■ | Lower interest rates lifted lending in Cleveland, Dallas and St. Louis; the outlook varied, with Kansas City and Cleveland optimistic and Dallas, Chicago and San Francisco weakening, plus shutdown risk. |
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Sector prospects Where the 3–12 month view points Strongest prospects Information Technology
XLK
▲ Improving | +0.50 |
| Utilities
XLU
▶ Steady | +0.10 |
| Industrials
XLI
▶ Steady | −0.02 |
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| Weakest prospects Consumer Discretionary
XLY
▼ Turning down | −0.40 |
| | Real Estate
XLRE
▼ Turning down | −0.29 |
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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 | Information Technology
XLK | | +0.50 | Leaning Favorable | +0.54 | +1.00 | ▲ +0.52 | | 2 | Utilities
XLU | | +0.10 | Neutral | +0.13 | n/a | ▶ +0.13 | | 3 | Industrials
XLI | | −0.02 | Neutral | +0.01 | +0.12 | ▶ +0.27 | | 4 | Materials
XLB | | −0.09 | Neutral | −0.30 | n/a | ▶ +0.04 | | 5 | Health Care
XLV | | −0.16 | Leaning Unfavorable | −0.09 | n/a | ▶ −0.14 | | 6 | Communication Services
XLC | | −0.19 | Leaning Unfavorable | −0.22 | n/a | ▶ −0.18 | | 7 | Consumer Staples
XLP | | −0.21 | Leaning Unfavorable | −0.13 | n/a | ▶ −0.20 | | 8 | Financials
XLF | | −0.25 | Leaning Unfavorable | −0.21 | −0.06 | ▼ −0.52 | | 9 | Real Estate
XLRE | | −0.29 | Leaning Unfavorable | −0.36 | −0.23 | ▼ −0.15 | | 10 | Energy
XLE | | −0.32 | Leaning Unfavorable | −0.04 | −0.91 | ▶ +0.15 | | 11 | Consumer Discretionary
XLY | | −0.40 | Leaning Unfavorable | −0.52 | −0.29 | ▼ −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 |
Changed little on balance: three districts grew slightly to modestly, five were flat and four softened slightly. Slightly weaker mix than August. | Employment largely stable but labor demand muted; more employers in most districts lowered head counts through layoffs and attrition, some citing AI investment. | | Inflation Pressure (higher = headwind) | | +1.50 |
Prices rose further and several districts said input costs accelerated (imports, insurance, health care, technology); pass-through varied. Kansas City manufacturers expect strong selling price growth. | Lower interest rates lifted loan demand in Cleveland (moderately), Dallas and St. Louis and started to spur San Francisco demand; offset by New York and Philadelphia business loan declines and tightening standards in several districts. | Varied: Kansas City broadly optimistic for 2026, Cleveland and Philadelphia expect modest growth; Dallas worsened, San Francisco weakened, Chicago expects a slight decrease, St. Louis slightly pessimistic, and a prolonged shutdown is a downside 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 | · | · | · | · | · | · | · | · | · | · | +1 | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | −1 | · | | FinancialsXLF | · | −1 | −1 | +1 | · | · | · | · | · | · | +1 | · | | Consumer DiscretionaryXLY | +1 | · | −1 | −1 | +1 | −1 | +1 | −1 | −1 | −1 | −1 | −1 | | Communication ServicesXLC | · | −1 | · | · | · | · | · | · | · | · | −1 | · | | IndustrialsXLI | +1 | · | +2 | −1 | −1 | · | −1 | −1 | · | +1 | +1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | +1 | −1 | | EnergyXLE | · | · | · | · | · | +2 | · | · | −1 | −1 | · | · | | UtilitiesXLU | · | · | · | · | · | +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 Information Technology +1 San Francisco Demand for business technology grew more noticeably; semiconductor projects boosted Arizona lending. Why it matters: San Francisco carries 47% of IT weight; moving to +1 adds about 0.47 to IT conditions. | Energy +2 Atlanta Most energy segments grew at a moderate pace; LNG exports remained robust. Why it matters: The only +2 Energy read; offsets declines in Kansas City and Minneapolis. | Industrials +2 Philadelphia Manufacturing increased moderately; 46% of firms raised production, the highest share in over a year. Why it matters: Strongest Industrials read; with Boston, Kansas City and Dallas it offsets four negative districts. | Consumer Discretionary −1 broad−based Seven districts incl. San Francisco, Dallas, St. Louis Consumers sought discounts; St. Louis contacts described a 'middle-class recession'. Why it matters: Broad weakness across high-weight districts keeps Discretionary at the bottom. | Real Estate −1 Atlanta, Kansas City, Dallas, San Francisco, Minneapolis Atlanta home sales declined moderately; Kansas City CRE declined moderately; SF single-family demand fell. Why it matters: Five negative districts including large weights outweigh New York and Chicago gains. | Financials +1 Cleveland, Dallas Loan demand increased moderately as households and businesses were encouraged by lower rates. Why it matters: Rate cuts begin to show up in loan demand, balancing New York and Philadelphia declines. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Expanded slightly; outlook neutral to cautiously optimistic. |
| New York Contracting −1.0 Outlook ▶ Continued to decline slightly; little increase expected. |
| Philadelphia Growing +1.0 Outlook ▲ Increased slightly; firms expect modest growth. |
| Cleveland Flat Outlook ▲ Flat; activity expected to increase modestly. |
| Richmond Growing +1.0 Grew modestly; consumer spending up modestly. |
| Atlanta Flat Unchanged; energy grew moderately, home sales declined. |
| Chicago Flat Outlook ▼ Flat; slight decrease expected over the next year. |
| St. Louis Flat Outlook ▼ Unchanged; outlook remains slightly pessimistic. |
| Minneapolis Contracting −1.0 Outlook ▼ Contracted slightly; most sectors down. |
| Kansas City Contracting −1.0 Outlook ▲ Fell slightly; broadly optimistic for 2026. |
| Dallas Flat Outlook ▼ Flat; outlooks deteriorated. |
| San Francisco Contracting −1.0 Outlook ▼ Edged down slightly; outlook weakened somewhat. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco moved to +1 on business technology and semiconductor demand, which with Boston lifts weighted IT conditions well above the unweighted average.
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| | Industrials — Philadelphia +2 against four -1 districts; the Northeast and Kansas City manufacturing recovery contrasts with Midwest and South weakness.
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| | Consumer Discretionary — seven negative districts; spending held up only where higher-income consumers dominate (Boston, New York) or EV sales were pulled forward.
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| | Energy — Atlanta +2 on Gulf production and LNG, while Dallas (45% weight) stayed flat with a negative 2026 outlook and Kansas City and Minneapolis declined.
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| | Financials — lower rates lifted loan demand in Cleveland and Dallas but business lending fell in New York and Philadelphia; consumer credit quality deteriorated in several districts.
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| | Utilities — first positive read (Atlanta) on solid electricity demand; data-center power demand also noted in Cleveland and Kansas City.
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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 |