CICC Says Cooler U.S. Payroll Growth Supports Fed Holding Rates Steady

CICC said cooler U.S. nonfarm payroll data in June supported its view that the Federal Reserve would neither raise nor cut interest rates within the year. According to Jin10, CICC said the U.S. added 57,000 nonfarm jobs in June, below market expectations, indicating that the earlier acceleration in job growth had cooled. After revisions to prior data, CICC said average monthly job gains over the past three months still reached 111,000, suggesting the labor market continued to expand. CICC said the unemployment rate fell to 4.2%, while the labor force participation rate continued to decline. It said this reflected steady labor demand alongside a contraction in labor supply, and that overall unemployment pressure was not significant. CICC said the data gave the Fed time to wait and observe, reinforcing its judgment that the Fed would keep rates unchanged within the year. Looking to the medium term, CICC said U.S. employment improvement this year was driven more by an economic cycle repair supported by AI investment rather than short-term factors such as the World Cup. It added that if aggregate demand continued to expand with support from AI, it did not rule out the possibility that the Fed could restart rate hikes next year.