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2003 News Releases
For immediate release:
January 3, 2003
Media contact:
Angela West Kogutt
Phone: (214) 922-5449
e-mail: angela.kogutt@dal.frb.org
Dallas Fed Analyzes
Purchasing Managers’ Index
DALLAS—Just how much attention ought business
analysts give to the Purchasing Managers’ Index (PMI) released
today by the Institute for Supply Management? Quite a lot,
according to the latest issue of Economic and Financial
Policy Review, the Federal Reserve Bank of Dallas’ online
economic research publication.
Vice president and
senior economist Evan Koenig discusses the construction
of the PMI and presents evidence
that it’s a good indicator of growth in the manufacturing
sector and the economy as a whole, and a valuable predictor
of changes in Federal Reserve policy. He concludes that PMI
values above 47 signal expansion in the manufacturing sector,
while the critical value for positive gross-domestic-product
(GDP) growth is around 40. Over the past 15 years, PMI values
below 52.5 have often been associated with falling short-term
interest rates.
Koenig notes that
the PMI is more timely than many other economic and policy
indicators and is not subject
to significant revision–features that contribute greatly
to its usefulness.
Find Economic and Financial Policy Review online
at http://dallasfed.org/research/efpr/
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