As we enter the second half of the year, market and economic indicators are sending signals of potential stabilization in certain sectors—while others remain in flux. Below is a snapshot of key developments and what they could mean for business leaders navigating this evolving environment.

Job Growth Holds Steady

Key Market Indicator

According to the Bureau of Labor Statistics, nonfarm payrolls increased by 147,000 in June, exceeding both the six-month moving average (+130,000) and the consensus forecast (+106,000). The unemployment rate edged down to 4.1%.

Why It Matters

Continued job growth, even at a moderated pace, suggests resilience in the labor market. For employers, this may signal persistent competition for talent. While wage inflation remains a concern in some sectors, a stable labor environment can support both consumer spending and long-term planning.

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Yield Curve Trends Toward Normalization

Key Market Indicator

Per the U.S. Treasury Department, the 10-year minus 2-year yield spread stands at +46 basis points, reflecting a slightly normal yield curve. Meanwhile, the MOVE Index, which tracks bond market volatility, remains subdued at 91 (below the long-term average of 94).

Why It Matters

A gradually normalizing yield curve may reflect a shift in market expectations about future growth or interest rates. Lower rate volatility can support borrowing, capital budgeting, and investment decisions for businesses, especially those managing large capital expenditures or refinancing debt.

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Leading Indicators Flatten Out

Key Market Indicator

The Conference Board reported that its Leading Economic Index (LEI) was unchanged in May, down -4.0% year-over-year. The LEI has been in negative territory but continues to trend slightly more positive since bottoming out in April 2023.

Why It Matters

While the LEI remains in contraction, the stabilization trend may indicate that the broader economy is moving toward a period of slower, but more predictable growth. This could be an important signal for business planning and resource allocation in the coming quarters.

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Services Sector Rebounds

Key Market Indicator

The Institute for Supply Management (ISM) reported its June Services PMI at 50.8, slightly above expectations. Ten industries reported growth, while six reported contraction.

Why It Matters

A reading above 50 indicates expansion in the services sector. For service-based businesses, this may point to a steadier demand environment. However, sector-specific dynamics still warrant close monitoring as business confidence and consumer trends remain uneven.

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Manufacturing Remains Subdued

Key Market Indicator

The June ISM Manufacturing PMI came in at 49.0, marking the fourth straight month of contraction. Nine industries reported growth, while six reported contraction.

Why It Matters

Manufacturing continues to face headwinds, though select industries are still expanding. Business owners in supply chain-heavy sectors may want to keep a close eye on inventory levels, order volumes, and global input costs in case of further softening.

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Housing Activity Ticks Up

Key Market Indicator

According to the National Association of Realtors, pending home sales were up 1.1% year-over-year in May, with all four U.S. regions reporting monthly gains. The average 30-year mortgage rate is currently 6.8%.

Why It Matters

Housing market activity, particularly in the face of elevated interest rates, may reflect persistent demand or constrained supply. For real estate investors, home builders, or related service providers, this may be an opportunity to evaluate timing and inventory strategies.

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Investor Sentiment Turns Extremely Positive

Key Market Indicator

The AAII Sentiment Survey showed 45.0% of investors are bullish and 33.1% bearish, creating a +11.9% bullish spread. The CNN Fear and Greed Index climbed to 78, classified as “extreme greed,” up from 56 one month ago.

Why It Matters

While sentiment doesn’t always align with future performance, extreme optimism may precede volatility. For business owners, understanding investor sentiment can provide useful context for conversations around capital raising, strategic exits, or risk management.

All data sourced from Bloomberg unless otherwise indicated.

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Actionable Takeaways

Reevaluate Hiring and Retention Strategies
With labor markets still relatively tight, reviewing compensation packages, benefits, and workplace culture may help secure and retain top talent

Lock In Financing While Volatility Remains Low
A quieter bond market may present an opportunity to refinance debt or access capital at more predictable terms.

Reassess Capital Expenditures for Q3–Q4
Use recent economic stability signals to prioritize projects that align with long-term growth, while remaining agile in the face of potential shifts.

Monitor Sector-Specific Demand Trends
Services appear to be recovering, while manufacturing is softening. Tailoring your operations or marketing strategy to reflect current sector trends may help businesses stay aligned with evolving market conditions.

Maintain a Long-Term Focus Despite Sentiment Swings
Elevated investor confidence can drive short-term gains but also create risk pockets. Stay grounded in your long-term financial plan and risk management strategy.

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