"The ESI's stability during recent months belies some of the recent weakness seen in other sentiment surveys and suggests that the underlying momentum of the U.S. economy, including employment, remains positive," Dow Jones Newswires "Money Talks" Columnist Alen Mattich said. "However, the ESI remains well below the 50-plus levels that characterize normal expansions. This relative weakness suggests it would take little to push the economy back into recessionary conditions."
The ESI is determined using an economic sentiment analysis algorithm to review news coverage in 15 daily newspapers across the U.S.
Positive reporting on corporate earnings, increasing interest in the public markets as household names such as Skype SA and General Motors plan initial public offerings and encouraging local and sector-specific stories contributed to the ESI's modest improvement.
News of record low new-home sales was counterbalanced by stories covering local real estate rebounds, including an up tick of home sales in the Hamptons and a bidding war over the John Hancock Tower in Boston. Thanks to strong aircraft orders, the transportation industry showed strength despite overall weakness in durable good orders.
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. Using a proprietary algorithm and derived data technology, the ESI examines every article in each of the newspapers for positive and negative sentiment about the economy. The indicator is calculated through Dow Jones Insight, a media tracking and analysis tool. The technology used for the ESI also powers Dow Jones Lexicon, a proprietary dictionary that allows traders and analysts to determine sentiment, frequency and other relevant complex patterns within news to develop predictive trading strategies.
