Investing school: Market movers - 'consumer sentiment index'
Published:Wednesday | April 6, 2011 | 12:00 AM
In most economies, consumer expenditure is the single-largest component of GDP, and by extension a major determinant of business profits.
The consumer confidence index is an indicator designed to measure consumer confidence, which is defined as the degree of optimism on the state of the economy that consumers are expressing through their activities of savings and spending.
A month-on-month decreasing trend in the index usually suggests consumers have a negative outlook on their ability to secure and retain good jobs, which does not bode well for consumer expenditure.
Conversely, a rising trend in consumer confidence typically indicates improvements in consumer buying patterns. Therefore, the index of consumer sentiment is one of the most closely watched indicators in the investment community and is a major market mover.
From next week, the Department of Management Studies will publish a Caribbean Consumer Index based on a survey of more than 6,000 consumers in Antigua and Barbuda, Barbados, Dominica, Grenada, Guyana, Jamaica, S. Kitts and Nevis, St Lucia, St Vincent and the Grenadines, and Trinidad and Tobago.
For the first quarter of 2011, how optimistic or pessimistic were consumers in the Caribbean and in your home country? You can find out next week.