The Purchasing Managers’ Index (PMI) has been shown to provide useful indications on where the economy is heading (Afshar et al., 2007; Koenig, 2002; Harris, 1991). We examine the predictive abilities of PMI on stocks that are sensitive to business cycle movements by testing if the index can contribute to forecasting a group of Swedish industrial machinery stocks during 2012-2023. We approach this by employing pairwise Granger Causality tests, using PMI data from five countries, and stock performance data for 11 industrial machinery stocks included in the OMXS30. The results indicate that PMI cannot contribute to forecasting the stock performance. Instead, we find empirical evidence of a predictive relationship in the opposite direction, suggesting that the stock performance can forecast the PMI.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:uu-533986 |
| Date | January 2024 |
| Creators | Winberg, Karl, Persson, Fabian |
| Publisher | Uppsala universitet, Nationalekonomiska institutionen |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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