Dow Jones Economic Sentiment Indicator Rises Slightly in May
June 01 2009 - 10:03AM
PR Newswire (US)
Increase Extends Modest Improvement Trend to Three Consecutive
Months, Signaling Worst of Recession May Be Past But Continued
Improvement Not Certain NEW YORK, June 1 /PRNewswire/ -- The Dow
Jones Economic Sentiment Indicator (ESI) continued a trend of
modest improvement in May rising to 29, up from 27.6 in April.
While the ESI is up nearly seven points from its all-time low of
22.2 in November of last year, the figure for May is still
significantly lower than one year ago, indicating that the U.S.
economy has not yet worked through the current recession.
Introduced in April 2009, the ESI has been back-tested to 1990,
allowing a detailed retrospective look at the indicator's
propensity for anticipating changes in the U.S. economy. "The ESI
has tended to reflect more caution about the economy than other
leading indicators," Dow Jones Newswires "Money Talks" columnist
Alen Mattich said. "The May increase leads me to believe that while
the economy may have bottomed out, we still have a way to go before
we can comfortably say we're moving out of this deep recession."
The Dow Jones Economic Sentiment Indicator aims to predict the
health of the U.S. economy by analyzing the coverage of 15 major
daily newspapers in the U.S. It uses a numerical scale from 0 to
100 to express the balance of sentiment in articles about the
economy. The ESI represents one of the most comprehensive and
far-reaching examinations of media coverage as an economic
indicator. The ESI's back-testing to 1990 shows that the ESI
clearly highlighted the risk that the U.S. economy was sliding into
recession in 2001 and 2008 and suggests the indicator can help
predict economic turning points as much as seven months in advance
of other indicators. Unlike some other indicators where 50 is a
clear break-point between recession and recovery, the ESI needs to
be read with reference to longer trends. Based on the ESI's
performance since 1990, previous recoveries have been marked by
substantial month-to-month gains, with a jump of three points
seeming to be a sign of significant improvement. A drop below 50
marks the point at which there is a clear risk of a slowdown. The
Dow Jones Economic Sentiment Indicator is calculated using a
proprietary algorithm through Dow Jones Insight, a media tracking
and analysis tool. More information about the Economic Sentiment
Indicator and its development is available at
http://solutions.dowjones.com/esi . Dow Jones Insight uses
innovative text mining and analytic technologies to help
organizations keep informed about relevant issues, news,
conversations and trends emerging in mainstream, Web and social
media. Dow Jones Insights' global content collection includes more
than 25,000 news and information sources as well as blogs, message
boards, and posts from YouTube and Twitter. About Dow Jones Dow
Jones & Company is a News Corporation company. (Nasdaq: NWS,
NWSA; ASX: NWS, NWSLV; http://www.newscorp.com/) Dow Jones is a
leading provider of global business news and information services.
Its Consumer Media Group publishes The Wall Street Journal,
Barron's, MarketWatch and the Far Eastern Economic Review. Its
Enterprise Media Group includes; Dow Jones Business &
Relationship Intelligence, Dow Jones Newswires, Dow Jones Factiva,
Dow Jones Client Solutions, Dow Jones Indexes and Dow Jones
Financial Information Services. Its Local Media Group operates
community-based information franchises. Dow Jones owns 50 percent
of SmartMoney and 33 percent of STOXX Ltd. and provides news
content to radio stations in the U.S. The Dow Jones Economic
Sentiment Indicator is provided for analysis purposes only and Dow
Jones makes no representation that the indicator is a definitive
predictor of sentiment or the health of the U.S. economy. This
report does not in any way reflect an opinion of Dow Jones
regarding the U.S. economy or the suitability of any investments.
DATASOURCE: Dow Jones & Company CONTACT: Rob Thibault of Dow
Jones & Company, +1-609-627-2680, Mobile, +1-609-216-4780, Web
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