US domestic-exposed sectors appear healthy

The most recent US Fed Beige Book corroborates the theme of domestic strength versus external weakness that's come across in many of the other reports over recent weeks. Mining and energy firms continue to struggle in the face of slumping commodity prices. 

Moreover, these declines are spreading to manufacturers and transport firms, which already remain under pressure given the high U.S. dollar and lackluster global growth, both of which appear to be affecting tourism activity also.

Still, the upbeat performance of sectors that remain relatively shielded from external demand is quite encouraging. Housing, commercial real estate, and most nonfinancial services appear to be on a relatively healthy growth path, which should ultimately outweigh the weakness in the externally-exposed sectors as far as the economy is concerned.

Perhaps the most encouraging elements of the report have to do with credit quality and wage growth, which are showing signs of improvement alongside the healing labor market. 

"While the current lack of robust wage and price pressures is likely to keep the Federal Reserve on the sidelines this year as far as rate hikes are concerned, it looks  optimistic that the conditions for improved wage and price dynamics are gradually developing", says TD Economics.