Short Cycle Monitor: June Results Moderate, Though YTD Trend is Strong

Research evidence excerpt

Short Cycle Monitor: June Results Moderate, Though YTD Trend is Strong

Industrials

Equity Research

June 17, 2026

Executive Summary

The diffusion index of MoM end-market change was -2 in June, a slight pullback vs the very

strong +6 reading in May. Over the past month, 3 end-markets were better (vs. 8 last month), while

5 were weaker (vs. 2 last month) and 3 were neutral (vs 1. last month). Better end-markets included

Manufacturing, Residential, and Steel. Ag, Heavy Construction/Infrastructure, Oil & Gas, Europe, and

Asia were all weaker M/M. A&D, Automotive and Transportation were neutral.

The six leading indicators netted -2 with two better and four weaker. The latest reading reflects M/

M improvement in two leading indicators (ISM New Orders, BAA Spreads) and moderation in four (Air

Traffic, OECD Leading Indicator, Diesel Consumption, Corrugated Box Shipments). ISM New Orders

have been at healthy expansionary levels for all of the year to date.

What does it mean? This month's -2 diffusion reading signals a moderation of improvement in end-

market conditions, though it comes after a very strong prior 3-month period which averaged +3 from

March to May. We continue to observe positive signals around green shoots in the US industrial

economy that could strengthen further in the months to come as the ME conflict winds down. That

said, we are watchful for inflationary risk with PPI for Matl's and Components for Mfg +9% in May,

which could put interest rate increases back on the table.

What's New in Europe? Eurozone manufacturing expansion growth moderated in May as rising prices

and supply disruptions weighed on demand. PMI fell to 51.6 from 52.2 in April, with output growth

slowing to a 4-month low and new orders stagnating after strong April. Part of the headline index's