--July DJ Economic Sentiment Index is unchanged at 42.8, after three
consecutive declines
--News coverage indicates U.S. economy facing headwinds in second half
By Kathleen Madigan
The Dow Jones Economic Sentiment Indicator was unchanged this month
after three straight drops, indicating the U.S. economy faces stiffer
headwinds in the second half.
The ESI stood at 42.8 in July, equal to the June reading. The index
remains at its lowest reading since December 2011.
"The focus has been on central bank policy, particularly hopes for a
major rescue of the euro by the European Central Bank," Dow Jones
Newswires "Money Talks" columnist Alen Mattich said. "But it's worth
noting that the ESI was weaker during the second half of the month
than it was during the first two weeks," which suggests momentum was
unraveling.
The downtrend so far in 2012 in the forward-looking ESI is bad news
for an economy already struggling. Real U.S. gross domestic product
grew at an annual rate of 2.0% in the first quarter and only a 1.5%
pace in the second.
Negative news in July included the Libor scandal, downbeat profit
guidance from companies such as Starbucks and Alcatel-Lucent, and
continued uncertainty about the euro-zone debt crisis.
Positive news coverage centered mostly on the Federal Reserve and
hopes that the U.S. central bank may take new moves to stimulate
growth.
The economic sentiment indicator is designed to project the health of
the U.S. economy by analyzing coverage of 15 major American
newspapers, using a proprietary algorithm to look for positive and
negative sentiment about the economy in every article.
The ESI is reported on a scale of 0 to 100; higher numbers represent
increasingly positive sentiment. Dow Jones selected the 15 newspapers
used to compile the indicator because they include extensive original
reporting on economic issues. They are also geographically diverse and
represent eight of the 10 largest metropolitan areas 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 doesn't in any way reflect an opinion of Dow
Jones regarding the U.S. economy or the suitability of any
investments.
Follow Dow Jones Sales & Trading on Twitter @DJSalesTrading for the
latest updates on the Economic Sentiment Indicator.
Write to Kathleen Madigan at kathleen.madigan@dowjones.com
(END) Dow Jones Newswires
July 31, 2012 13:00 ET (17:00 GMT)
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