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CICC: Non-Farm Resilience Does Not Support Fed's Early Rate Cut
Summary: According to data from FX678, CICC research report stated that the US added 147,000 non-farm jobs in June, exceeding market expectations of 110,000, with the unemployment rate dropping from 4.2% to 4.1%, indicating resilience in the labor market. Despite the uncertainty of tariffs reducing labor demand, the strengthening of immigration policies is also slowing down ...
According to data from FX678, CICC research report stated that the US added 147,000 non-farm jobs in June, exceeding market expectations of 110,000, with the unemployment rate dropping from 4.2% to 4.1%, indicating resilience in the labor market. Despite the uncertainty of tariffs reducing labor demand, the strengthening of immigration policies is also slowing down labor supply, which is suppressing the rise in unemployment rates. Additionally, there may be a skills mismatch in the labor market: on one hand, government layoffs and rapid development of artificial intelligence are leading to an 'excess of white-collar workers'; on the other hand, tightening immigration policies are causing a continuous shortage of low-skilled positions. In this structural mismatch, the future unemployment rate may not necessarily rise significantly. CICC believes that the June non-farm data does not support an early rate cut by the Fed, maintaining the previous assessment that the next rate cut may have to wait until the fourth quarter, after the price increases caused by tariffs have passed.
