Zhongjin: Non-farm resilience does not support the Fed to cut interest rates ahead of time.

The report from Zhongjin Research points out that the United States added 147,000 non-farm jobs in June, surpassing market expectations of 110,000. The unemployment rate fell from 4.2% to 4.1%, indicating that the labor market still shows resilience. Despite the uncertainty of tariffs reducing labor demand, the strengthening of immigration policies has also slowed down labor supply, which has helped to suppress the rise in unemployment rates. Furthermore, there may be a skills mismatch in the labor market: on one hand, government layoffs and the rapid development of artificial intelligence have led to an "excess of white-collar workers"; on the other hand, tightening immigration policies have resulted in a continued shortage of low-skilled workers. Under this structural mismatch, the unemployment rate may not necessarily rise significantly in the future. We believe that the non-farm data for June does not support the Federal Reserve cutting interest rates in advance. We maintain our previous judgment that the next rate cut may have to wait until the fourth quarter, after the price hikes caused by tariffs have passed.