"Why U.S. Employment Indicators Are the Most Valuable"

Shinhan Investment Corp. analyzed on June 10 that U.S. employment indicators are currently the most meaningful indicators from an investment strategy perspective, serving as the central basis for trend assessment.

Kim Seonghwan, a researcher at Shinhan Investment Corp., explained, "Despite the deep concerns prevailing in the market, U.S. inflation and consumption indicators remain stable," adding, "This is because companies have not yet actively passed on tariff burdens to their selling prices."

He continued, "There are several reasons for this, but looking at the earnings call transcripts of consumer goods companies, a major factor is that the final tariff rates have not yet been determined," emphasizing, "This suggests that once tariff rates are finalized, a certain portion of the pain from tariffs is highly likely to be passed on to consumers."

Kim noted, "Even though real economic indicators have been solid so far, this is being discounted as a temporary pre-demand effect," and explained, "Concerns persist that once tariff rates are finalized after the mutual tariff suspension deadline in July, negative shocks to consumption and inflation may occur."

Shinhan Investment Corp. assessed that since the U.S. stock market has already rebounded, the potential for further gains may be limited if pessimism subsides. The company also explained that downward pressure should be considered if expectations for rate cuts are removed.

He added, "We need to consider which indicators currently provide valuable information for investment strategies, and we believe employment indicators should be at the center of trend assessment," stating, "Ultimately, if employment remains robust, even if a consumption shock occurs due to tariffs, recovery resilience can be expected."

He emphasized, "The labor market remains solid, with weekly unemployment claims at historical lows, and the May employment report was also better than consensus," adding, "While this may not be an upside risk, it is news that alleviates downside risks."

He further stated, "Even if consumption in the third quarter is exposed to volatility from tariffs, as long as employment does not decline, year-end consumption is highly likely to normalize," and added, "This signals that even if the stock market has rebounded somewhat quickly, investors should not rush to sell too soon."