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Business Economics

, Volume 53, Issue 4, pp 195–201 | Cite as

Improving the usefulness of the Purchasing Managers’ Index

  • Rolando F. PeláezEmail author
Original Article
  • 69 Downloads

Abstract

A structural break in the GDP growth—PMI relationship occurred in 2004Q1. The break is likely the result of a secular slowdown in average GDP growth. PMI-based forecasts of GDP growth that ignore the break are biased. Modeling the break eliminates forecast bias, reduces root mean square forecast error, and significantly increases the signaling power of the PMI.

Keywords

Forecasting GDP growth Structural breaks Purchasing Managers’ Index 

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Copyright information

© National Association for Business Economics 2018

Authors and Affiliations

  1. 1.College of BusinessUniversity of Houston-DowntownHoustonUSA

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