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Nowcasting: Trust the Purchasing Managers’ Index or wait for the flash GDP estimate?

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  • Gabe de Bondt

Abstract

Timely and accurate signals about the current state of the economy are essential for analysts. The objective of the paper is to compare the accuracy of PMI-based nowcast of current quarter-on-quarter real GDP growth with that of the flash GDP estimateIn-sample regressions for 1998Q3-2011Q1 Real-time analysis for 2003-2010 This study shows for the first time that euro area real GDP nowcasts using the PMI survey can be more accurate than Eurostat’s flash GDP estimate for extended periods of time in predicting the final GDP release.

Suggested Citation

  • Gabe de Bondt, 2012. "Nowcasting: Trust the Purchasing Managers’ Index or wait for the flash GDP estimate?," EcoMod2012 3896, EcoMod.
    • Handle: RePEc:ekd:002672:3896
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    References listed on IDEAS

    as
    1. Lahiri, Kajal & Monokroussos, George, 2013. "Nowcasting US GDP: The role of ISM business surveys," International Journal of Forecasting, Elsevier, vol. 29(4), pages 644-658.
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    3. Ethan S. Harris, 1991. "Tracking the economy with the purchasing managers' index," Research Paper 9124, Federal Reserve Bank of New York.
    4. Sarah Gelper & Christophe Croux, 2010. "On the Construction of the European Economic Sentiment Indicator," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(1), pages 47-62, February.
    5. Evan F. Koenig, 2002. "Using the Purchasing Managers' Index to assess the economy's strength and the likely direction of monetary policy," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, vol. 1(6).
    6. Ethan S. Harris, 1991. "Tracking the economy with the purchasing managers' index," Quarterly Review, Federal Reserve Bank of New York, vol. 16(Aut), pages 61-69.
    7. Cade Massey & George Wu, 2005. "Detecting Regime Shifts: The Causes of Under- and Overreaction," Management Science, INFORMS, vol. 51(6), pages 932-947, June.
    8. Thomas Raffinot, 2007. "A monthly indicator of GDP for Euro-Area based on business surveys," Applied Economics Letters, Taylor & Francis Journals, vol. 14(4), pages 267-270.
    9. James Rossiter, 2010. "Nowcasting the Global Economy," Discussion Papers 10-12, Bank of Canada.
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    Cited by:

    1. Radoslaw Sobko & Maria Klonowska-Matynia, 2021. "The Relationship between the Purchasing Managers’ Index (PMI) and Economic Growth: The Case for Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 198-219.
    2. repec:ers:journl:v:xxiv:y:2021:i:special1:p:198-219 is not listed on IDEAS
    3. SAHIN, Emrah & GUNGOR, Selim & KARACA, Suleyman Serdar, 2020. "Empirical Analysis Of The Relationship Between Purchasing Managers Index And Bist Industrial Index Under Structural Breaks," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 24(3), pages 6-22, September.
    4. Gabe J. Bondt & Stefano Schiaffi, 2015. "Confidence Matters for Current Economic Growth: Empirical Evidence for the Euro Area and the United States," Social Science Quarterly, Southwestern Social Science Association, vol. 96(4), pages 1027-1040, December.

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