Short Cycle Monitor: July Data Improves; 2Q Previews

Research evidence excerpt

Short Cycle Monitor: July Data Improves; 2Q Previews

Industrials

Equity Research

July 17, 2026

Executive Summary

The diffusion index of MoM end-market change was +2 in July, an improvement vs the -2 reading in

June. Over the past month, 6 end-markets were better (vs. 3 last month), while 4 were weaker (vs. 5 last

month) and 1 were neutral (vs 3 last month). Better end-markets included Automotive, Manufacturing,

Oil & Gas, Transportation, Europe, and Asia. Weaker end markets M/M were Ag, Heavy Construction/

Infrastructure, Residential, and Steel. A&D was the only neutral end market M/M.

The six leading indicators netted -2 with two better and four weaker again in July. The latest

reading reflects M/M improvement in two leading indicators (BAA Spreads, Diesel Consumption) and

moderation in four (OECD Leading Indicator, ISM New Orders, Corrugated Box Shipments, and Air

Traffic). ISM New Orders have been at healthy expansionary levels for all the year to date period.

What does it mean? This month’s +2 diffusion reading indicates improving end market conditions,

with continued signs of demand recovery across the industrial landscape. ISM PMI has now remained

in expansionary territory for six consecutive months, supporting greater confidence that growth

momentum will continue to build through the 2H26 reporting season.

What's New in Europe? Eurozone manufacturing growth eased modestly in June, with PMI slipping

to 51.4 from 51.6 in May. Despite the slight decline, factory activity capped the strongest quarter

for production since early 2022, supported by a sixth consecutive month of output growth and a

modest improvement in new orders. Export demand remained weak, while supply disruptions tied to