Societe Generale Urges Focus on U.S. Jobless Claims Amid Market Concerns

France's Societe Generale has warned investors to look beyond inflation and focus on the U.S. labor market, particularly the initial jobless claims data, as a critical indicator for the stock market. Manish Kabra, the head of U.S. equity strategy at Societe Generale, emphasized that while the Consumer Price Index (CPI) and Producer Price Index (PPI) are closely watched, the number of initial jobless claims in the U.S. is a more immediate concern for stock investors.

Historical data shows that the number of initial jobless claims typically rises to around 300,000 about six months before a recession. Since October 2022, the number of initial jobless claims has consistently remained below 250,000, and it has not approached 300,000 at any point this year. This trend suggests that the labor market is still relatively stable, but any significant increase in jobless claims could signal an impending economic downturn.

Market expectations for the week ending July 19 indicate that the number of initial jobless claims is likely to rise from the previous week's 221,000 to 229,000. This data point, scheduled for release on July 20 at 20:30 Beijing time, will be closely monitored by investors for any signs of a potential shift in the labor market.

Samuel Tombs, an economist, noted that the labor market is still slowing down. He anticipates that the number of initial jobless claims could rise to around 250,000 in the coming weeks, serving as a critical threshold for the U.S. stock market. If this number is exceeded, it could indicate a significant shift in the economic landscape, potentially leading to a downturn in the stock market. This perspective underscores the importance of monitoring unemployment data alongside inflation metrics to gain a comprehensive understanding of the economic environment.