The calendar says it’s a shortened holiday week, but nobody told the data releases. Over the next 48 hours, traders will digest the ISM Manufacturing PMI, construction spending, and — the headliner — the June employment report, crammed into Thursday because Friday is Independence Day observed. Buckle up.
ISM Manufacturing PMI — the factory floor check
The Institute for Supply Management dropped its June manufacturing index at 10:00 a.m. Eastern, and it came in at 53.3 — missing the 53.8 consensus and pulling back from May’s 54.0. Not a cliff dive, but enough to remind everyone that the manufacturing revival isn’t a straight line.
May’s 54.0 was the strongest reading in three years, and the internals genuinely impressed: new orders surged, production ticked higher, and employment in the sector clawed back toward the expansion line. June dialed back the enthusiasm just a notch, but there are some silver linings buried in the sub-indexes.
- New Orders: 56.0, down from May’s 56.8 but still solidly in expansion territory. Factories are still booking business — just at a slightly slower clip.
- Employment: remained in contraction, holding below 50 for another month. The factory floor isn’t adding headcount, even as demand holds up.
- Prices Paid: plunged to 73.0 from 82.1 in May. This is the big one — input cost pressures cooled dramatically, which is unequivocally good news for the inflation narrative.
- Supplier Deliveries: slowed, but the prices-paid plunge suggests supply-chain friction is easing, not tightening.
The takeaway? A headline miss with a disinflationary chaser. The prices-paid collapse is far more significant for Fed policy and markets than the 0.7-point PMI miss. If input costs are genuinely cooling, it chips away at the “sticky inflation” case that’s kept the FOMC in a holding pattern.
Construction spending — the housing and infrastructure pulse
Also dropping at 10:00 a.m.: the May construction spending report from the Census Bureau. April came in at a $2.17 trillion annualized rate, up 0.4% month-over-month, driven by a surge in manufacturing construction and steady public infrastructure outlays.
Construction has been one of the economy’s quiet workhorses — residential spending is treading water, but the non-residential side (factories, data centers, bridges) keeps chugging. Today’s number gives us a temperature check on whether that momentum carried into May.
The main event: June payrolls land Thursday
With the Fourth of July weekend gobbling up Friday, the Bureau of Labor Statistics bumped the June employment report to Thursday at 8:30 a.m. That gives investors roughly 24 hours to process the ISM data before the week’s real headliner hits.
Here’s where expectations sit:
- Nonfarm payrolls: forecast at 110,000–130,000 (Trading Economics and Capital Economics, respectively), down sharply from May’s 172,000 and April’s 179,000
- Unemployment rate: expected to hold at 4.2%
- Average hourly earnings: likely steady, keeping year-over-year wage growth in the mid-3% range
The forecasted payroll deceleration isn’t panic-worthy — May’s 172,000 print blew past the 80,000 consensus, so some mean reversion is baked in. But anything below 100,000 would shift the conversation from “soft landing” to something less comfortable.
Market reaction
The S&P 500 started July on a softer footing, slipping as chip stocks declined and the ISM headline miss kept buyers cautious. The prices-paid plunge, however, kept the damage contained — bond markets took the disinflation signal and ran with it, keeping Treasury yields in check.
The real question is what Thursday’s payrolls print will do to the rate-cut timeline. A soft ISM combined with a weaker-than-expected jobs number would give the “cut in September” camp real ammunition. Stay tuned.
The bottom line
Two Tier-1 releases in two days, both landing before the holiday weekend. Today’s ISM report gave us a split decision: the headline manufacturing index stumbled to 53.3, but prices paid crashed from 82.1 to 73.0 — a disinflationary signal that should ease some of the “higher for longer” anxiety. Tomorrow’s payrolls is the main course — the Fed’s favorite labor market gauge will determine whether this week ends with genuine macro clarity or just more mixed signals.