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Tracking and Predicting the German Economy: ifo vs. PMI

Robert Lehmann and Magnus Reif

No 8145, CESifo Working Paper Series from CESifo

Abstract: This analysis investigates the predictive power of the most important leading indicators for the German economy, which are provided by the ifo Institute and IHS Markit. We conduct an out-of-sample, real-time forecast experiment for growth of gross domestic product and growth of gross value added in both the manufacturing and the service sector. We find that both survey providers produce valuable leading indicators to predict the current quarter of German GDP growth. Regarding forecasts for the next quarter, the ifo indicators are slightly better than the IHS Markit headline index. For the manufacturing sector, series provided by ifo are clearly superior to those of IHS Markit. For the service sector, the ifo indicators produce better nowcasts, whereas the indicators by IHS are more valuable for one-quarter-ahead predictions.

Keywords: forecasting nowcasting; survey data; ifo Business Climate; PMI (search for similar items in EconPapers)
JEL-codes: E17 E27 E37 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-eec, nep-for, nep-mac and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Predicting the German Economy: Headline Survey Indices Under Test (2021) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8145

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