EconomyxAI · Beige Book Sector Monitor October 2026Released October 14, 2026 · Data through October 5 |
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Conditions index +0.23 avg of 11 sectors, −2 to +2 |
| Outlook index +0.52 sectors with an outlook |
| Districts growing 9/12 per National Summary |
| Positive momentum 5/11 sectors improving |
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This release in brief The read | ■ | Nine districts grew (two moderately) and three were flat; growth outside manufacturing was thin. | | ■ | Manufacturing still leads: Dallas had a sharp, broad pickup, and Philadelphia, Cleveland, New York and Minneapolis grew moderately on data centers, defense and power generation. | | ■ | Inflation picked up: three districts reported robust price growth, four said the pace quickened, and higher oil and diesel prices showed up in every district. | | ■ | Credit tightened as rates rose: Chicago, New York, Dallas and San Francisco tightened standards, Kansas City CRE spreads widened substantially, and housing slowed in most districts. | | ■ | Consumers are stretched outside the high end: spending fell in Minneapolis, Kansas City and San Francisco, and consumer-facing firms are absorbing costs rather than raising prices. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Industrials
XLI
▶ Steady | +0.59 |
| Information Technology
XLK
▲ Turning up | +0.44 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | −0.42 |
| Health Care
XLV
▼ Weakening | −0.30 |
| Consumer Staples
XLP
▶ Steady | −0.11 |
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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 | | +0.73 | Favorable | +0.67 | +1.00 | ▶ +0.14 | | 2 | Industrials
XLI | | +0.59 | Favorable | +1.00 | +1.00 | ▶ +0.04 | | 3 | Information Technology
XLK | | +0.44 | Leaning Favorable | +0.69 | n/a | ▲ +0.42 | | 4 | Materials
XLB | | +0.19 | Leaning Favorable | +0.09 | +1.00 | ▶ +0.15 | | 5 | Utilities
XLU | | +0.07 | Neutral | +0.13 | +1.00 | ▶ −0.06 | | 6 | Financials
XLF | | −0.05 | Neutral | +0.25 | −0.06 | ▶ −0.37 | | 7 | Communication Services
XLC | | −0.06 | Neutral | +0.00 | n/a | ▶ −0.11 | | 8 | Consumer Discretionary
XLY | | −0.10 | Neutral | −0.06 | +0.23 | ▼ −0.20 | | 9 | Consumer Staples
XLP | | −0.11 | Neutral | +0.11 | n/a | ▶ +0.07 | | 10 | Health Care
XLV | | −0.30 | Leaning Unfavorable | −0.21 | n/a | ▼ −0.42 | | 11 | Real Estate
XLRE | | −0.42 | Leaning Unfavorable | −0.11 | −0.50 | ▶ −0.42 |
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 |
Nine districts grew (two moderately, three modestly, four slightly) and three were flat, one fewer grower than August; manufacturing led while other sectors showed little growth overall. | Eight districts reported slight to modest job gains and four no change, but the national read is 'little changed'; five districts said firms trimmed staff by attrition or slowed hiring after AI investments. | | Inflation Pressure (higher = headwind) | | +1.50 |
Faster than August (1.25): three districts robust, eight moderate (three with intensifying input pressure), one modest; four said the pace picked up, oil prices hit every district, and firms expect further increases as contracts and hedges expire. | Worse than August (-0.25): rising mortgage and long-term rates and an increase in the federal funds rate (Dallas) slowed housing and autos; Chicago financial conditions tightened modestly, New York, Dallas and San Francisco tightened standards, and Kansas City CRE spreads rose substantially. Cleveland loan demand was the exception. | Most firms kept a positive outlook, but expectations are for slight growth, weighted toward manufacturing and burdened by uncertainty; Boston dimmed, New York expects little improvement, San Francisco stayed soft and Dallas bankers turned pessimistic. |
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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 | +1 | +1 | | Health CareXLV | · | −1 | · | · | · | · | · | · | · | · | −1 | · | | FinancialsXLF | +1 | · | +1 | +2 | · | +1 | · | · | +1 | · | +1 | −1 | | Consumer DiscretionaryXLY | · | +1 | · | · | +1 | · | · | · | −1 | −1 | +1 | −1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | +2 | +2 | · | +1 | +1 | +1 | +1 | +1 | +2 | · | | Consumer StaplesXLP | · | · | · | · | · | · | −1 | · | · | · | · | +1 | | EnergyXLE | · | · | · | · | · | +1 | · | · | +1 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | +1 | · | · | · | · | · | · | | Real EstateXLRE | −1 | +1 | −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 Information Technology +1 San Francisco Semiconductor manufacturing in the Mountain West expanded; demand for capital equipment and industrial automation rose. Why it matters: San Francisco carries 47% of IT weight; moving from 0 to +1 adds about 0.47 to the weighted IT score. | Industrials +2 Dallas Texas manufacturing accelerated further with a sharp pickup in production and demand, beyond AI or semiconductors. Why it matters: Dallas (12% weight) is the only district to strengthen sharply, offsetting slower growth in Philadelphia and Cleveland. | Industrials +1 to +2 broad−based Philadelphia, Cleveland, New York, Minneapolis Manufacturing grew moderately on data centers, AI, defense and power generation; Philadelphia's growth is broadening. Why it matters: Breadth across nine districts keeps Industrials the top conditions sector even as the pace cooled from August. | Financials −1 San Francisco Overall lending activity weakened slightly; higher borrowing costs dampened mortgage and auto loan demand. Why it matters: San Francisco holds 16% of Financials weight; the move from 0 to -1 offsets much of Cleveland's +2. | Real Estate +1 New York Manhattan office leasing brisk with bidding wars, but property sales slowed as rising interest rates reduced demand. Why it matters: New York (14% weight) falling from +2 to +1 is the largest single drag on Real Estate momentum. | Real Estate −1 broad−based Boston, Philadelphia, Chicago, St. Louis, San Francisco Home sales and residential construction declined as rising mortgage rates pushed buyers out of the market. Why it matters: Five districts negative, including San Francisco (27% weight), pull the weighted Real Estate score below zero. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▼ Expanded slightly; tourism up, retail and home sales softer; outlook dimmed. |
| New York Growing +1.0 Outlook ▶ Increased slightly, led by manufacturing; little improvement expected outside it. |
| Philadelphia Growing +1.0 Outlook ▲ Rose slightly, down from modest; manufacturers far more optimistic than others. |
| Cleveland Growing +1.0 Outlook ▲ Increased modestly; manufacturing moderate; robust loan demand; slight growth ahead. |
| Richmond Growing +1.5 Grew moderately; consumer spending solid and hotels strong; manufacturing flat. |
| Atlanta Growing +1.0 Grew modestly; residential real estate and energy moderate; manufacturing stable. |
| Chicago Flat Outlook ▲ Flat on balance; manufacturing up modestly, construction and business spending down. |
| St. Louis Growing +1.0 Outlook ▶ Modestly increased; prices rose robustly; outlook unchanged. |
| Minneapolis Growing +1.0 Increased slightly; manufacturing moderate, consumer spending down slightly. |
| Kansas City Flat Outlook ▲ Held steady; subdued with pockets of strong demand; diesel squeezing margins. |
| Dallas Growing +1.5 Outlook ▲ Expanded moderately; manufacturing picked up notably; price growth strong. |
| San Francisco Flat Outlook ▼ Broadly steady; retail and residential real estate softened; outlook soft. |
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Where the signal is thin or split Divergences to watch | Industrials — still the strongest conditions and outlook, but Philadelphia and Cleveland slowed from strong/robust to moderate; Dallas (12% weight) sharpening to +2 keeps the weighted score up.
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| | Financials — Cleveland +2 on robust loan demand, but San Francisco (16%) turned negative and New York (28%) is flat; bank outlooks in Boston and Dallas turned pessimistic as rates rose.
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| | Real Estate — weighted score falls as New York cooled from +2 and Boston, Philadelphia, Chicago and San Francisco softened on rising mortgage rates; outlooks lean negative.
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| | Consumer Discretionary — K-shaped; high-end travel and New York tourism hold up while Minneapolis, Kansas City and San Francisco (26% weight) declined; margins squeezed.
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| | Information Technology — San Francisco (47% weight) moves to +1 on Mountain West semiconductor expansion, lifting IT on thin evidence; no IT outlook given.
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| | COMMUNICATION SERVICES, UTILITIES, MATERIALS and STAPLES: thin coverage; Utilities and Materials outlooks come from one district each and fall below the 25% coverage minimum.
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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 |