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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.
    2. Domenico Giannone & Jérôme Henry & Magdalena Lalik & Michele Modugno, 2012. "An Area-Wide Real-Time Database for the Euro Area," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 1000-1013, November.
    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.
    6. Ethan S. Harris, 1991. "Tracking the economy with the purchasing managers' index," Quarterly Review, Federal Reserve Bank of New York, issue 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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