Business Climate: ISMImprovement in the ISM. The manufacturing ISM improved modestly (49.0, +0.5 pp) in June, with a notable jump in output (50.3, +4.9 pp), which entered expansion territory for the first time since February. The non-manufacturing ISM returned to growth territory (50.8, +0.9 pp) thanks to a rebound in activity and new orders.
The CEO Economic Outlook declined again in Q2, reaching a five-year low (69.3, -14.7 points). The three components assessed (plans for capital investment, plans for U.S. employment, and expectations for sales) have all fallen.
Household confidenceHousehold sentiment remains low. Surveys by the University of Michigan (60.7, +8.5 points) and the Conference Board (93.0, -5 points) indicated opposite directions in June, but both pointed to historically low levels. 1-year inflation expectations fell sharply, according to the University of Michigan (+5.0%, -1.6 pp).
The underlying gauge of labour market optimism declined for the sixth consecutive month in the Conference Board survey, falling to its lowest level since March 2021, with fewer respondents perceiving jobs as ”plentiful”.
