DEFINITION of ‘Sentiment Indicator’
A graphical or numerical indicator designed to show how a group feels about the market, business environment or other factor. A sentiment indicator seeks to quantify how various factors, such as unemployment, inflation, macroeconomic conditions or politics influence future behaviour.
BREAKING DOWN ‘Sentiment Indicator’
Sentiment indicators can be used by investors to see how optimistic or pessimistic people are to current market conditions. For example, a consumer sentiment index that shows pessimism may make companies less likely to stock up on inventory, because they may fear that consumers will not spend.