Data out of the factory sector was positive. The ISM Mfg. Index in July just above expectations for 56.2 at 56.3. All components were strong, exports the leading contributor. Factory Orders jumped 3% in June, skewed by aircraft orders that more than doubled in the month. Aircraft has helped the factory sector this year which has otherwise been struggling. This increase offset back-to-back declines in both May and April.

Data outside of the factory sector was mixed, the ISM Non-Mfg. Index was below consensus expectations, and the lowest since August of last year. This is likely the result of a summer slow-down that is expected to fade in coming months. The International Trade deficit shrunk to a below-consensus level of -43.6B in June, a positive for Q2 GDP revisions, and GDP growth moving forward. The decrease was helped by higher international demand for capital goods, cars and food.

Construction Spending fell -1.3% in the month, well below expectations for a 0.5% gain. Declines in residential spending and all public components were contributing factors.

Labor market conditions remain solid, the Employment Situation report indicated that non-farm payrolls added 209K jobs in the month, well ahead of expectations. Manufacturers and professional & business services were the leading drivers. The unemployment rate ticked lower by 0.1%, and the participation rate rose by the same, both positives. Average hourly earnings increased 0.3% in the month, Y/Y rate remained unchanged. Personal Income was flat despite strength in the wages & salaries component, which rose 0.4% M/M. Spending rose just enough to keep it in the positive column, up 0.1% M/M, seemingly fueled by savings which fell -1.7% to a 3.8% rate. Weak results point to less consumer momentum going into Q3.