Dow Jones Economic Sentiment Indicator Rises to 39.4 for May

News of European Economic Turmoil, Unemployment Rate Countered by Increased

Consumer Spending on Small Indulgences, Positive News in Auto Industry

Jun 01, 2010, 10:00 ET from Dow Jones & Company

NEW YORK, June 1 /PRNewswire/ -- Positive consumer spending trends, movement toward an IPO by General Motors and a month without a singular negative U.S. economic story dominating headlines helped the Dow Jones Economic Sentiment Indicator to rise from 38.3 in April to 39.4 in May.

The upward movement of the ESI was stunted by news of an increasing unemployment rate and continued concerns about Europe's economic stability following the Greek economic crisis.

"Overall, the ESI has been flat during recent months. This likely reflects the failure of a significant pickup in underlying employment trends and suggests that while the U.S. economy is no longer in recession, its recovery is subdued," Dow Jones Newswires "Money Talks" Columnist Alen Mattich said. "The modest rise of the Dow Jones ESI in May is largely due to a reversal of April's slight downward distortion caused by coverage of the Congressional inquiry into Goldman Sachs."

The rise in the ESI comes as U.S. consumers' feelings about the economy are improving. In May, the Conference Board's Consumer Confidence Index registered its highest level since March 2008 while the University of Michigan/Reuters Consumer Sentiment Index showed a modest increase from April to May.

Positive consumer trends come in spite of a slight rise in the national unemployment rate in April. Non-farm payroll employment, however, showed strong growth in May, likely driven by government hiring of temporary census workers.

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.  This is the same technology that powers Dow Jones Lexicon, a proprietary dictionary that allows traders, quantitative analysts and asset managers to analyze sentiment, frequency and other relevant complex patterns within news to develop predictive trading strategies.

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.

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://dowjones.com/esi .

About Dow Jones Insight

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 (www.dowjones.com) is a News Corporation company (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV; www.newscorp.com) and a leading provider of global news and business information. Its principal products include The Wall Street Journal, Dow Jones Newswires, Dow Jones Factiva, Barron's and MarketWatch. Through its Local Media Group, Dow Jones operates community-based newspapers and Web sites. Dow Jones also provides news content to television and radio stations.

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.

SOURCE Dow Jones & Company



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