US December Beige book bodes well into payrolls and Fed's December rate hike

US Beige book for December, for the survey period between late-October and late-November suggests that economic activity rose slightly accross Federal Reserve Districts.

The domestically exposed sectors strength was contrasting with the weakness in externally- exposed ones remain intact in the December Beige book. The non-financial services, housing and CRE sectors are showing strength.

The manufacturing, transport, energy and export exposed sectors stay as the weak ones, as high USD and weak global growth leads to challenging demand conditions. The roaring dollar seems to be effecting the contribution of tourism.

"While the greenback strength is likely to persist, with the ECB likely to announce further stimulus measures tomorrow, there are nascent signs that conditions for externally-exposed sectors may be near inflection point", says Economics TD in a research note. 

ISM manufacturing print declined, but many Districts reporting improvements in manufacturers, with the firms generally expecting better conditions in next year.

Simultaneously, the growing import growth appears to benefit the transport firms, which partially is a function of surging greenback. The theme of tightening labot markets was available in this report, with slight to medeival gains in jobs as reported accross the country.

"We see a solid 219k print in Friday's payroll report and expect that average hourly earnings will continue to tick higher by 0.3% m/m (a theme that is also corroborated in today's Beige Book) with both these factors giving the Fed further assurance to pull the interest rate lever in two weeks' time", added Economics TD.