The ISM manufacturing index posted a larger-than-expected contraction, falling into negative territory at 48.7 from 49.2. The new orders index fell to 45.4, its lowest level since May 2023, from 49.1, Production slipped to 50.2 from 51.3 in April; that 50.2 was the weakest sicne February, and the backlog of orders dropped to 42.4, also the weakest level since November.

To be sure, prices paid component eased to 57 from 60.9. But that was still above the six-month average of 54. So, inflation pressures linger and manufacturing remains remain. This may explain why consumers generally view the economy as poor, which is hurting President Biden's re-election prospects.

In another development, construction spending fell for the second consecutive month, a result of high borrowing costs and tight lending conditions. And for residential construction, affordability. Add to the bad news for President Biden: Non-residential construction ex-office construction is expected to slow as the initial benefit of the Inflation Reduction Act fades away.