How are sentiment indices determined?

[zaysev36]

I know it's kinda silly question, but I don't understand how exactly do you find out what sentiments are present in a particular segment, how do you count them or define that it's dominant. For example, how is European Sentiment Index formed?

 

[Rhody Trader]

You'll find that most sentiment indices are survey driven, though that isn't always true. As for your specific example:

The Economic Sentiment Indicator (ESI) is a composite indicator made up of five sectoral confidence indicators with different weights: Industrial confidence indicator, Services confidence indicator, Consumer confidence indicator, Construction confidence indicator Retail trade confidence indicator. Confidence indicators are arithmetic means of seasonally adjusted balances of answers to a selection of questions closely related to the reference variable they are supposed to track (e.g. industrial production for the industrial confidence indicator). Surveys are defined within the Joint Harmonised EU Programme of Business and Consumer Surveys. The economic sentiment indicator (ESI) is calculated as an index with mean value of 100 and standard deviation of 10 over a fixed standardised sample period. Data are compiled according to the Statistical classification of economic activities in the European Community, (NACE Rev. 2). Source: DG ECFIN

http://ec.europa.eu/eurostat/web/products-datasets/-/teibs010

 

[zaysev36]

You'll find that most sentiment indices are survey driven, though that isn't always true. As for your specific example:

The Economic Sentiment Indicator (ESI) is a composite indicator made up of five sectoral confidence indicators with different weights: Industrial confidence indicator, Services confidence indicator, Consumer confidence indicator, Construction confidence indicator Retail trade confidence indicator. Confidence indicators are arithmetic means of seasonally adjusted balances of answers to a selection of questions closely related to the reference variable they are supposed to track (e.g. industrial production for the industrial confidence indicator). Surveys are defined within the Joint Harmonised EU Programme of Business and Consumer Surveys. The economic sentiment indicator (ESI) is calculated as an index with mean value of 100 and standard deviation of 10 over a fixed standardised sample period. Data are compiled according to the Statistical classification of economic activities in the European Community, (NACE Rev. 2). Source: DG ECFIN

http://ec.europa.eu/eurostat/web/products-datasets/-/teibs010

Thanks. So it's a survey, got it. Would you happen to know some examples of "questions closely related to the reference variable they are supposed to track"? And who exactly gets surveyed?

 

[Rhody Trader]

Thanks. So it's a survey, got it. Would you happen to know some examples of "questions closely related to the reference variable they are supposed to track"? And who exactly gets surveyed?

You'd have to dig into the surveys. A lot of them are based on plans and/or expectations for the future.

 

[zaysev36]

You'd have to dig into the surveys. A lot of them are based on plans and/or expectations for the future.

I see, will do. Thanks a lot for your answers