The missile defense system is contentious in South Korea and has drawn sharp criticism from China, which sees the system’s radar as a threat. Beijing has taken retaliatory economic measures against Seoul, including curtailing the flow of Chinese tourists and punishing South Korean companies in China.

During his campaign, Mr. Moon, who won the presidency last month, complained that the United States and the previous South Korean administration had rushed to deploy Thaad in order to present him with a fait accompli. His decision to suspend the installation could strain relations with the White House, which has taken a hard line in confronting North Korea and its nuclear weapons program. It could also hurt American efforts to present a tough, unified position with Japan and South Korea against the North.

Mr. Moon, who has said he wants to resolve the nuclear crisis through dialogue, has also suggested that South Korea must “learn to say no” to Washington. He has already signaled a softening stance toward North Korea by encouraging aid groups to visit the country, although the North has rejected those offers since Seoul supported new United Nations sanctions.

Analysts said that as people protested the Thaad installation and South Korean businesses pressured the government to improve relations with China, Mr. Moon might have decided that suspending the progress of the system was politically expedient.

“I think he is trying to find a diplomatic way to slow down the process to placate the business community and placate his political supporters,” said Stephen R. Nagy, senior associate professor of politics and international studies at International Christian University in Tokyo.

Mr. Moon may also have sensed that China was not going to back down. When Lee Hae-chan, South Korea’s special presidential envoy, visited Beijing last month, President Xi Jinping did not concede anything. China’s strategy is to stand firm against Thaad to force Mr. Moon to modify or even eliminate the system, which the Chinese suspect he does not like, either.