US Electrical Equipment & Multi-Industry: EE/MI Morning Note - June ISM, Non res construction, ITT preview

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US Electrical Equipment & Multi-Industry: EE/MI Morning Note - June ISM, Non res construction, ITT preview

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US Electrical Equipment & Multi-Industry Equities

AmericasEE/MI Morning Note - June ISM, Non res

construction, ITT preview Industrial, Diversified

Amit Mehrotra

Analyst

amit.mehrotra@ubs.com

June ISM remains expansionary- The Institute for Supply Management released their +1-201-352 1410

June ISM Manufacturing index yesterday which moderated slightly to 53.3 from 54.0 in

Neal Burk

May. This was in line with what we were expecting based on how the regional Fed

surveys were trending. On new orders, the index remains relatively consistent to May, neal.burk@ubs.com

coming in at 56.0 vs 56.8 in May. Overall, this marks the 6th straight month of short +1-212-713 4066

cycle activity improvement after several years of weakness.

Pratap Singh

Yesterday's release supports our positive view on Industrial equities, with potential for pratap-za.singh@ubs.com

growth beyond AI/data center driven capex. To this point, we talked in our preview +1-212-821 3112

about how companies with limited exposure to the data center buildout are also Zachary Walljasper

beginning to see better demand trends, with expected organic growth accelerating to Associate Analyst

roughly +3.5% in 2Q from +1.7% in 1Q. While these are early signs, we have noted that zachary.walljasper@ubs.com

typically when short cycle industrial activity inflects positively, it stays positive for about +1-212-713 9829

three years…suggesting there is plenty of further growth potential in non-AI end

markets (link). However, the positive outlook is not without risk. Geopolitical tensions

still persist, and pricing remains elevated.