IBES figures on changes to equity analysts’ earnings forecasts in October are now available. A useful summary measure is the world “revisions ratio” – upgrades minus downgrades divided by the total number of estimates. The ratio moved further into negative territory, reaching its lowest level since 2003. More grist for the bears?

Perhaps not. The revisions ratio exhibits a seasonal pattern, with a clear tendency for analysts to become less optimistic (more realistic?) on their return from summer holidays. As the chart shows, after adjusting for seasonal factors the ratio is still at a level consistent with moderate G7 industrial growth.

Two further points are worth noting. First, the regional breakdown shows more downgrades in the Eurozone than the US in October (after adjusting for seasonals). This fits with my view that the consensus is too fixated with US economic weakness and is underplaying downside risks in Euroland.

Secondly, the measure shown in the chart excludes emerging markets, for which analysts are still marking up earnings estimates. Solid emerging world growth remains an important offset to economic weakness elsewhere.