The marquee gauge of US factory activity missed estimates in data released Monday, but underlying indexes of new orders and input prices perhaps took the edge off what might’ve otherwise been a disconcerting development.

In truth, I doubt anyone much cared. It was July 3. History strongly suggested the next day would be July 4. That meant the number of people watching for the June ISM print was diminished materially.

At 46, the headline matched the lowest estimate from 59 economists. The range was 46 to 49. It was the eighth straight month in contraction territory.

Meanwhile, S&P Global’s gauge of US factory activity was unchanged from the flash reading at 46.3. June marked the second month during which both were below 50.

As usual, it was hard to reconcile the two surveys. S&P Global cited “a sharper downturn in new orders” but said firms “still sought to replace voluntary leavers and fill long-held vacancies, meaning employment grew further.” In the ISM survey, by contrast, the new orders gauge was one of the only bright spots (45.6 was still deep in contraction territory, but was a marked improvement from May’s 42.6 print) and the employment index slipped into contraction at 48.1.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, beat the recession drum. “The health of the US manufacturing sector took a sharp turn for the worse in June, adding to concerns over the economy potentially slipping into recession in the second half of the year,” he said. “Leading the darkening picture was a severe drop in demand for goods, with new orders slumping at a rate among the steepest since the global financial crisis.”

Some of this is just goods-to-services switching. It’s summer in the US. People are more interested in “experiences” than they are merchandise although, as someone who only spends money at the farmer’s market and local grocery stores, I’ll confess to not having the best read on what “normal” people buy when the weather’s good.

ISM prices paid fell to 41.8. Irrespective of the read-through for demand (i.e., bad), I’d argue that’s a good thing. Along with receding price growth for shelter+, the Fed is counting on goods disinflation to persist as they attempt to wrestle stickier services sector inflation back down to acceptable levels.

June’s ISM prices print was the lowest since December, and the second lowest since the pandemic.

“In this environment, pricing power is fading rapidly,” S&P Global’s Williamson remarked. “The focus now turns to the service sector, where inflationary pressures have been more stubborn in recent months amid resurgent post-pandemic demand.”

The ISM anecdotes were mixed, but a few were generally (and genuinely) downbeat. Survey Committee Chair Tim Fiore said firms are still “manag[ing] outputs down as softness continues and optimism about the second half of 2023 weakens.”

One anecdote stuck out to me as particularly apt when it comes to capturing the mid-2023 zeitgeist. “Here we are almost halfway through the year, and while things are challenging, we may be doing all right,” it read.