Is the Purchasing Managers' Index useful for assessing the economy's strength? A directional analysis

Yoichi Tsuchiya

Economics Bulletin, 2012, vol. 32, issue 2, 1302-1311

Abstract: 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.

Keywords: directional analysis; forecast evaluation; forecast accuracy; survey data (search for similar items in EconPapers)
JEL-codes: E2 E3 (search for similar items in EconPapers)
Date: 2012-04-26
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Citations: View citations in EconPapers (11)

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