Rob Carnell, Chief International Economist at ING, notes that the US February Institute of Supply Management (ISM) manufacturing index rose to 49.5 from 47.8 in January. Key Quotes “This means that manufacturing is likely to be expanding at a slightly stronger pace than it was in January. But slightly stronger is still a long way from robust. Typically, we see an index of 50 or above as necessary to indicate growth at an acceptable rate, whilst 43.2 is the historical break-even index for contraction or expansion. One key element of this release, which always happens the same week as the US labour report, is the employment index. This also rose, reaching 48.5 from a very soft 45.9 in January. But like the headline index, it remains deep in “contraction” territory, albeit marginally less so than in January. Moreover, as a guide to payrolls, this is not very reliable. Despite the weak January employment index, January manufacturing payrolls employment actually rose by 29,000, its highest since November 2014. On a more positive note, new orders remained positive at a respectable 51.5. Markets will no doubt see this survey as a positive release, an excuse for stocks to rally and bond yields to rise. But in truth, this is another mixed survey, and not terribly reliable at that. We do not see it as sufficiently robust to warrant the Federal Reserve raising rates again at its March meeting.” For more information, read our latest forex news.