ING expects the next US ISM surveys to ease after strong January readings, based on weaker signals from regional Federal Reserve surveys in February. It estimates the economy is adding about 50,000 jobs per month.
ING says most job gains have been concentrated in private education and healthcare services. It puts these sectors at about 70% of all jobs added over the past three years.
Unemployment Rate Expected To Rise
It expects the unemployment rate to rise to 4.4% after a recent unexpected drop. It links this to limited job creation across the wider economy.
ING does not expect the Federal Reserve to cut rates before June. It also says a near-term rate cut would require further changes in the data.
We expect the upcoming ISM reports to soften from the strong figures posted in January of this year. Regional Federal Reserve surveys have already painted a weaker picture for February, suggesting that economic activity is cooling. This potential for disappointing data could increase market volatility, making options that profit from price swings, like VIX calls, a prudent consideration.
The underlying story is that the economy is adding only about 50,000 jobs per month, a figure masked by headline numbers. Of the 225,000 jobs the Bureau of Labor Statistics reported for January 2026, nearly two-thirds came from private education and healthcare, a pattern we also saw through much of 2025. This narrowness is a concern, suggesting traders could use options to favor defensive sectors over cyclical ones that rely on broad economic strength.
Fed Cut Before June Seen As Premature
We anticipate the unemployment rate will tick back up towards 4.4% in the coming reports, after it held steady at 3.9% last month. This gradual weakening won’t be enough to trigger a rapid policy change from the Federal Reserve. Therefore, derivative positions betting on a rate cut before the June meeting still appear premature, as reflected in Fed Funds futures which are pricing in only a small chance of a May cut.
It would take a significant downturn to get the Fed thinking about an imminent rate cut. For now, the central bank seems content to wait and watch the data unfold through the spring. This suggests traders could position for a range-bound market in the short term, perhaps by selling premium through strategies like iron condors on major stock indices.
