Investing.com -- Barclays has introduced weather-linked investment insights that quantify how adverse weather affects specific sectors and companies.
In its July 2025 report, the brokerage uses ERA5 weather data to evaluate financial impacts across retail and industrial sectors, providing metrics based on historical performance from 2010 to 2025, excluding COVID-19 years.
Using ERA5 reanalysis data with a spatial resolution of 9km x 9km, Barclays created a daily weather tracker based on four thresholds: over 1 inch of precipitation or snowfall, temperatures above 30°C or below 0°C.
These indicators were mapped to U.S. store locations and merged with same-store sales data from IBES. A two-way fixed effects regression model was used to isolate the impact of weather.
In the restaurant sector, each additional day of adverse weather was associated with a 6.61 basis point drop in same-store sales.
The negative effect was more pronounced in casual dining, which depends on discretionary, in-person traffic.
Quick-service restaurants, with broader geographic presence and drive-thru access, showed more resilience.
By contrast, home improvement and auto parts retailers saw gains. For home improvement, each extra day of bad weather corresponded to a 16.34 basis point increase in comparable sales.
Auto parts retailers recorded a 10.85 basis point increase. Barclays attributed these results to consumer behavior such as storm preparation and post-weather repairs.
The study also assessed hurricane-related economic effects using a Single-Family Home Flood Indicator.
This index combines hurricane path and precipitation data from NOAA and ERA5 with U.S. Census housing data to estimate flood exposure.
Retailers typically see a pre-storm sales spike, a drop during the storm, and a recovery driven by home repairs.
For example, Hurricanes Helene and Milton in 2024 contributed a 50-100 basis point boost to quarterly same-store sales for Home Depot (NYSE:HD), Lowe's (NYSE:LOW), and Floor & Decor from Q3 2024 to Q1 2025.
Weather disruptions also affect heavy industry. Barclays tracked 360 cement plants in the Americas and Europe, using ERA5 data to identify extreme temperature days, defined as deviations beyond two standard deviations from a 60-day average.
A higher number of such days was linked to lower year-over-year sales growth.
The analysis shows that when disruptions were low, companies typically posted positive sales growth; when disruptions rose, growth shifted toward negative territory.