Is the Purchasing Managers’ Index Useful for Assessing the Economy’s Strength? A Directional Analysis
Tokyo University of Science - School of Management
April 26, 2012
Economics Bulletin, Vol. 32, Issue 2, April 2012
The Purchasing Managers' Index (PMI) is one of the key variables to which economists pay considerable attention for assessing US economic activities, particularly, business conditions in the manufacturing sector. Although the PMI has been used to assess the US economy, there is hardly any attempt to evaluate the directional accuracy of the PMI to predict the direction of change in the index of industrial production (IP) and Gross Domestic Production (GDP). We present evidence that the PMI is a useful predictor of the direction of change in the IP, particularly in the recent decade.
Number of Pages in PDF File: 10
Keywords: directional analysis, forecast evaluation, forecast accuracy, survey data
JEL Classification: E27, E37Accepted Paper Series
Date posted: April 27, 2012
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