Component levels remain firm despite the drop-back since November for all the major sentiment indexes
, leaving the sentiment survey data at odds with the apocalyptic views that currently seem to be driving the markets.
According to the pioneering literature, the construction of comprehensive sentiment indexes
has become the mainstream of the construction of sentiment indexes
Sentiment indexes, which are constructed from answers to survey questions, are popular with the media; newspaper articles and commentaries abound following their release.
Few studies have found that sentiment indexes have significant explanatory power once fundamental economic factors are taken into account.
In this section, we summarize the empirical literature on the use of consumer sentiment indexes in a consumption function.
To evaluate the informational content unique to sentiment indexes, they must be purged of information that could come from their determinants.
The findings in the empirical literature on consumer sentiment indexes can be divided into three groups.
The second group includes studies finding that sentiment indexes have an incremental explanatory value.
According to the survey, the business sentiment indexes
for smaller companies, although improving, failed to climb out of negative territory.
Component levels remain historically high despite the drop-back since November for all the major sentiment indexes
, though it is disappointing that the services measure didn't pick up the firming pattern evident in the factory sentiment indexes
The mining sector is facing a renewed headwind from falling oil prices however, and it looks like analysts are going to enter a pull-back period for the producer sentiment indexes
. The ISM-adjusted average of the major producer sentiment surveys is falling to a 2-year low of 55 from 57 in October and November, and 59 cycle-highs in five of the six months through September.
ISM climb to a 14-year high of 60.8 from 59.1 in January and 59.3k in December, versus a prior high of 60.2 in September, leaves the measure oscillating around remarkably lofty levels, as is the case with all of the producer sentiment indexes
. Analysts expect the ISM-adjusted average of the major surveys to rise back to the 58 cycle-high in February that was also see in December, and previously in both September and October, from 57 in January, and previously in November.