ING’s James Knightley expects upcoming US ISM surveys to soften from January’s strength, reflecting weaker regional Federal Reserve signals. He argues the economy is truly adding about 50,000 jobs per month, with private education and healthcare dominating gains, and sees the unemployment rate edging up to 4.4%. ING still anticipates no Federal Reserve rate cut before June.

Jobs breadth, ISM signals and Fed path

"The ISM reports were both very robust in January, but the regional Federal Reserve surveys have painted a slightly softer picture for the economy in February, and we expect that to be reflected in the ISMs."

"We believe the underlying story is that the economy is adding around 50,000 jobs per month, but that private education & healthcare services continue to be the main source of employment – accounting for around 70% of all the jobs added over the past three years."

"The lack of breadth of job creation is a concern, and we expect the unemployment rate to tick back up to 4.4% after the surprise drop last month."

"None of this will be enough to trigger imminent Fed rate cuts, with the next move unlikely before June, in our view."

"Still, our view is that it would take quite a lot to get the Fed thinking about an imminent rate cut."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)