From the Desk - Economic Commentary
Brandon Casey, Member Strategies - 8/3/2026
U.S. equity markets are moving higher this morning as investors respond positively to a decline in oil prices and easing geopolitical tensions in the Middle East. All three major averages are up at least 1% in early trading. The rally follows President Trump's decision to call off planned strikes against Iran and resume diplomatic talks, which has pushed Brent crude oil down nearly 6% and reduced some of the inflation concerns that weighed on markets in recent weeks. Investors look ahead to a busy week of economic data, including labor market reports, and another round of corporate earnings releases.
The ISM Manufacturing PMI rose to 55.6 in July from 53.3 in June, marking the seventh consecutive month of expansion and the strongest reading since May 2022. The report showed broad-based improvement across the manufacturing sector, with the New Orders Index increasing to 56.7, the Production Index jumping to 58.5, and the Employment Index rising to 52.8, moving back into expansion territory for the first time in nearly three years. While the Prices Index remained elevated at 71.1, it moderated slightly from June, suggesting cost pressures remain significant but are no longer accelerating.
Construction spending declined 0.4% in June following a revised 0.3% increase in May, reflecting ongoing pressure from higher borrowing costs. Total construction spending was reported at a seasonally adjusted annual rate of approximately $2.16 trillion. Residential construction activity remained mixed, as elevated mortgage rates continued to weigh on portions of the housing market, while infrastructure-related projects continued to provide support in certain segments of nonresidential construction.
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