Is PMI Useful in Quarterly GDP Growth Forecasts for India? An Exploratory Note

Article Type

Research Article

Publication Title

Journal of Quantitative Economics


This paper examines the relationship between India’s quarterly overall GDP, manufacturing GDP and services GDP and the corresponding monthly data on overall manufacturing and services PMI for the period January 2006 to July 2014. The objective is to see if the two overall PMIs are related to the level and quarterly growth rate of overall GDP and its chosen components. Considering the quarterly time series nature of the data set, the HEGY equation of Hylleberg et al. (J Econom 44:215–238, 1990) extended by adding the PMI variables as exogenous regressors is used as the regression mode to relate a GDP level/growth rate variable to the two overall PMI variables. The results show that the three GDP level variables, but none of the GDP growth rate variables, have significant positive correlation with services PMI, but not with manufacturing PMI. Finally, the marginal effect of services PMI on manufacturing GDP level is found to be the largest, followed by that for overall GDP level and services GDP level.

First Page


Last Page




Publication Date


This document is currently not available here.