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World Economics - Measuring Global Economic Activity and GDP


The Sales Managers Index: United States

Released: April 19, 2016

US Economic Growth Picks Up in April

  • Market Growth Index registers sharp gains
  • Price discounting still at high levels
  • Despite sales growth, business confidence remains low

The Headline Sales Managers’ Index (SMI) rose for the second successive month to reach 52.0 in April providing further evidence of renewed economic activity in the US.

The Sales Growth Index registered a value over 50.0 for the first time since November of last year. This continues the reversal of the declining trend that began in June 2015. Since this index has a strong correlation with GDP this suggests that Q2 will see a recovery in US economic growth after expected weakness in Q1. This trend was backed up with the Market Growth Index which showed sharp gains, rising to a six month high.

In contrast, the Business Confidence Index remained at low levels in April registering a third successive monthly fall. This measure suggests that the recovery in US domestic growth is tentative and pessimism still remains about the prospects for a return to higher levels of growth.

The Prices Charged Index rose above the 50.0 no change level for the first time since December 2015. This indicates that the downward influence of lower energy costs on prices may be coming to an end and that as the US economy recovers from its recent slump, deflationary pressures will subside. However, price discounting remains at high levels.

The Staffing Index fell in April for the third successive month suggesting the low business confidence levels continue to impact on recruitment.


 








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Notes to Editors
The SMI’s (Sales Managers’ Indexes) are compiled and analysed by World Economics and are based on survey data collected from a panel of US companies balanced by the all Industry Classification Board (ICB) sectors which are weighted to reflect their contribution to national Gross Domestic Product.

The Sales Managers’ Index results are calculated as
diffusion index which have the characteristics of leading indicators by taking the percentage of respondents that report that activity has risen (“Increasing") and adding it to one-half of the percentage that report the activity has not changed (“Unchanged"). Using half of the “Unchanged" percentage effectively measures the bias toward a positive (above 50 points) or negative (below 50 points) index. An example of how to calculate a diffusion index: if the response is 40% “Increasing," 40% “Unchanged," and 20% “Reducing," the Diffusion Index would be 60 points (40% + [0.50 x 40%]). A value of 50 indicates "no change" from the previous month.

The more distant the index is from the amount that would indicate "no change" (50 points), the greater the rate of change indicated. Therefore, an index value of 58 indicates a faster rate of increase than an index value of 53, and an index value of 40 indicates a faster rate of decrease than an index value of 45. A value of 100 indicates all respondents are reporting increased activity while 0 indicates that all respondents report decreased activity.

Three month Moving Averages are applied to each index to mitigate the effect of seasonal variations, original un-adjusted data are not revised after publication.



About the Sales Managers’ Indexes
The Sales Managers’ Index has been developed by World Economics, a leading edge provider of original economic data. Sister products include the World Price Index, Global Marketing Index, World Economics Journal, as well as country level Growth Trackers. 


The Sales Managers' Index provide the earliest monthly data on the speed and direction of US economic activity.


Key advantages of the US SMI:
  •   The SMI provides the first indication each month of the speed and direction of economic growth.   
  •   The SMI provides the most complete indication of growth, covering all private sector activity.
  •   The SMI is based on a key occupational group - sales executives - uniquely able to sense accurate changes in business activity levels.

  •  The SMI survey base - salespeople - are used by virtually all businesses, unlike other occupational groups.

  •   The SMI's focus on the world’s growth areas – providing comparative data for Asia, the America's and Africa.



About World Economics
World Economics is an organisation dedicated to producing analysis, insight and data relating to questions of importance in understanding the world economy. Its parent company Information Sciences Ltd has a long history of the development of key business information today used throughout the world, including the origination of the Purchasing Managers Indexes in Europe and Asia (now owned by Markit), and the development of WARC a global information provider for major corporations .

Currently our primary research objective is to encourage and assist the development of better and faster measures of economic activity. In cases where we believe we can contribute directly, as opposed to through highlighting the work of others, we are producing our own measures of economic activity.

Our work is mainly of interest to investors, organisations and individuals in the financial sector and to significant corporations with global operations, as well as governments and academic economists.

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