Munich Personal RePEc Archive

Is PMI a good leading indicator of industrial production?: Evidence from India

Herwadkar, Snehal S. and Ghosh, Saurabh (2020): Is PMI a good leading indicator of industrial production?: Evidence from India.

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Abstract

The manufacturing Purchasing Managers’ Index is often used by policy makers to gauge the ‘nerve’ of the real economy and as lead indicator of industrial activity. This paper makes an effort to evaluate whether the PMI is indeed a good lead indicator of IIP or whether by relying on PMI the policy makers are making a systematic error. Using ARDL technique, this paper largely support the claim that the PMI is a good lead indicator of industrial activity, albeit only in the short run.

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