Dow Jones Economic Sentiment Indicator Dips to 34.1, First Monthly Decrease Since February
September 30 2009 - 9:50AM
PR Newswire (US)
Mixed economic news and media coverage of continued weakness in
labor and housing markets contribute to decline NEW YORK, Sept. 30
/PRNewswire/ -- The Dow Jones Economic Sentiment Indicator (ESI)
fell for the first time in seven months, declining to 34.1 in
September as media coverage of a higher unemployment rate,
continued weakness in the housing market and generally mixed
economic news outpaced that of limited positive economic news for
the month. The ESI was 35.5 in August, its highest level in a year.
"While the ESI's drop could be an early indication of the double
dip some economists have been warning about, any sentiment data can
be expected to show some random volatility," said Dow Jones
Newswires 'Money Talks' columnist Alen Mattich. "However, the Dow
Jones Economic Sentiment Indicator has previously proved much less
volatile than other sentiment indicators. The fall in September
still leaves it above the level for July." The two leading
consumer-based economic indicators have been particularly volatile
in the past several months. The University of Michigan Consumer
Sentiment Index unexpectedly soared to 73.5 in September after two
months of unanticipated declines. The Conference Board's Consumer
Confidence Index was expected to rise in September, but instead
fell to 53.1. Over the past year, the two consumer indicators have
also been at odds as often as they agreed, moving in unison up or
down only six times. 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. In addition to
continued job loss and a weak housing market, the anniversary of
Lehman Brothers' collapse generated significant news, but analysis
shows it did not skew the overall tenor of newspaper coverage and
thus did not play a significant role in the ESI's dip. Two other
news events received extensive, but short-lived newspaper coverage.
Negative news coverage of the end of the "cash for clunkers"
program focused on the sharp decline in auto sales in September
while the G20 meeting in Pittsburgh generated coverage that was
more positive than average for the month. However, neither story
generated enough coverage to significantly affect the ESI. 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 Insight's 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, or Mobile, +1-609-216-4780,
Web Site: http://solutions.dowjones.com/esi
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