Sentiment Analysis of the Fifth District Manufacturing and Service Surveys

Abstract

Using very simple text analytic tools, this article extracts and analyzes the sentiment expressed in comments provided by participants in two surveys conducted by the Richmond Fed: the Fifth District Survey of Manufacturing Activity and the Fifth District Survey of Service Sector Activity. Specifically, the article first develops a set of sentiment indicators that intend to capture the "emotions" reflected in the open-ended comments. The indicators are intended to track three categories of sentiments: negative, positive, and uncertain. Second, to evaluate the information content of the indicators, the article contrasts the sentiment measures against responses to other questions included in the surveys. This kind of exercise is meaningful because these other questions are supposed to specifically inquire about monthly changes in business conditions experienced by survey participants. Third, the article examines the evolution of the sentiment indicators over time and compares their behavior to an indicator of economic activity reported by the Richmond Fed, the manufacturing composite diffusion indices (DIs). Fourth, the article also shows that this methodology can be employed to identify the extent to which responses by individual survey participants show a systematic pattern. For instance, based on the sentiment implicit in the their written comments, this approach can identify those respondents who are systematically positive, negative, or uncertain.