Manufacturing Sentiment: Forecasting Industrial Production With Text Analysis

Tomaz Cajner et al.

Journal of Applied Econometrics2026https://doi.org/10.1002/jae.70046article
AJG 3ABDC A*
Weight
0.50

Abstract

This paper leverages free‐form textual responses from a key manufacturing survey to create sentiment indexes that mirror categorical measures from the same survey and also contain predictive content—both in and out‐of‐sample—for manufacturing output. We use textual data from the Institute for Supply Management to compare sentiment metrics based on dictionary and deep learning natural language processing methods. The best performing sentiment measures classify comments based on fine‐tuned deep learning models. To add interpretability, we apply Shapley decompositions to show that a relatively small number of words—associated with very positive and very negative sentiment—account for much of the variation in the aggregate sentiment index.

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https://doi.org/https://doi.org/10.1002/jae.70046

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@article{tomaz2026,
  title        = {{Manufacturing Sentiment: Forecasting Industrial Production With Text Analysis}},
  author       = {Tomaz Cajner et al.},
  journal      = {Journal of Applied Econometrics},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1002/jae.70046},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.