The Citigroup’s U.S. Economic Surprise Index Improved Based on the Latest U.S. Job Report

The Citigroup U.S. Economic Surprise Index has improved significantly since August. The improving outlook for U.S. economic growth will benefit the Russell 2000 Index, at least in the medium term. The latest U.S. labor market statistics for September showed a sharp month-over-month increase, far exceeding expectations; more than 159,000 new jobs were added in August, while the market expected +140,000.

The Citigroup Economic Surprise Index is constructed using the weighted historical standard deviation of surprises (the difference between the actual release and the Bloomberg survey) and weighted according to their respective importance. When the CES is above 0, the economy is outperforming market expectations. When the CES is below 0, the economy is worse than expected. Surprise Index values ​​rise when the economy recovers, but fall rapidly when the economy weakens. The recent positive improvement in the Citigroup U.S. Economic Surprise Index could benefit the lagging Russell 2000 Index.