Financial Conditions and Purchasing Managers’ Indices: Exploring the Links

15 Pages Posted: 14 Oct 2019

See all articles by Burcu Erik

Burcu Erik

Bank for International Settlements (BIS)

Marco J. Lombardi

Bank for International Settlements (BIS) - Monetary and Economic Department

Dubravko Mihaljek

Bank for International Settlements (BIS) - Monetary and Economic Department

Hyun Song Shin

Bank for International Settlements (BIS)

Date Written: September 22, 2019

Abstract

Purchasing managers' indices (PMIs) have found a place in global conjunctural analysis and quarterly GDP nowcasting, serving as reliable concurrent indicators of real economic activity. They also closely mirror changes in equity prices and corporate bond spreads. More surprisingly, PMIs react to changes in the dollar index, and do so in a way that runs counter to a trade competitiveness explanation. We show that the financial variables help predict PMIs and explain a significant proportion of their variation. The two seem to be linked through shifts in macroeconomic sentiment and global financing conditions

JEL Classification: C53, E27, F31, F47

Suggested Citation

Erik, Burcu and Lombardi, Marco Jacopo and Mihaljek, Dubravko and Shin, Hyun Song, Financial Conditions and Purchasing Managers’ Indices: Exploring the Links (September 22, 2019). BIS Quarterly Review, September 2019, Available at SSRN: https://ssrn.com/abstract=3468437

Burcu Erik (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Marco Jacopo Lombardi

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland
+41612809492 (Phone)

Dubravko Mihaljek

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Hyun Song Shin

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

HOME PAGE: http://www.bis.org/author/hyun_song_shin.htm

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