ASR WSJ Newsflow

ASR/WSJ Newsflow: Composite Newsflow rose to 64.6 in August

• The ASR/WSJ Global Composite Newsflow Indicator (CNI) rose in August to stand at 64.6, from 64.0 in July. This is its highest level since March 2005.

• The CNI has significantly diverged from the Global Manufacturing PMI. This divergence widened in August, with the PMI falling to 52.5 from 52.8.

• Performance among the components was mixed – big rises in the Labour Market and Monetary Newsflow were offset by falls in the Inflation and Earnings components.

• On a longer perspective, in the past five months the key upward drivers of the CNI, which is up 2.9, have been the Monetary Policy and Inflation components, up 5.8 and 7.9 respectively since March. The other components have increased far less significantly, while the Economic component is actually down 2.5.

• Conclusion: The resilience of the CNI is a puzzle. We have previously identified the risk that our English language “search strings” may be over-emphasising US strength, but if we look at the drivers of the upward move we also see that it is concentrated mainly in the ‘macro variable’ components (Inflation, Monetary Policy). The Monetary Policy CNI in particular has benefitted from chatter about Fed tightening and coverage of policy rises elsewhere, including the UK, Argentina, India and Indonesia in August. By contrast the ‘real activity’ components (Economic, Earnings, Revenues, Labour Market) have been less robust, with the average of the four actually falling since the start of the year from 59 to 58.5, and perhaps indicating a weaker picture than the headline figure suggests.


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