U.S. ISM Non-Manufacturing New Orders: Diverging Sector Fortunes in Capital Markets and Construction

The U.S. ISM Non-Manufacturing New Orders Index for July 2025, , signals a modest but meaningful slowdown in services-sector momentum. , , while construction and labor-intensive industries face headwinds. For investors, this data is a critical signal to rebalance sector exposures, leveraging opportunities in high-growth areas while hedging against risks in vulnerable segments.

Capital Markets: A Tailwind of Policy and Innovation

The ISM report highlights robust demand in capital markets, driven by two megatrends: (AI) infrastructure and expansion. The U.S. . For example, , .

Investors should note that capital markets are not just benefiting from demand—they're also gaining from policy tailwinds. The 's recent rate cuts, while still cautious, have improved access to capital for tech and infrastructure projects. Additionally, , .

Construction: A Perfect Storm of Tariffs, Labor, and Policy Uncertainty

In stark contrast, the construction sector is grappling with a perfect storm of challenges. The ISM data shows a decline in new orders for construction, a trend corroborated by industry reports. on steel, aluminum, . For context, the U.S. , , .

Labor shortages compound these issues. , . , particularly in regions like Texas and California, . Meanwhile, .

Strategic Adjustments for Investors

The diverging trajectories of capital markets and construction demand a recalibration of sector allocations. Here's how investors can position themselves:

1. Overweight Capital Markets and AI-Driven Sectors:
2. and Semiconductors.
3. .

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5. and Materials:

6. .
7. .

8. , Texas, California).

9. and Supply Chain Risks:

10. .
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12. , ManpowerGroup, .

The Road Ahead: and Opportunities

. . Meanwhile, , 2025, .

Investors should also watch for in the 2026 election cycle. A potential shift in immigration or trade policy could alleviate some of the construction sector's pressures, but until then, the sector remains a high-risk, .

: Balancing Momentum and Caution

The U.S. services sector is at a crossroads. , , , . For investors, the key is to align portfolios with the former while insulating against the latter. , .

As always, . The ISM data is not just a snapshot—it's a roadmap for navigating the next phase of the economic cycle.