N.A.P.M. Business Survey Data: Their Value as Leading Indicators

Abstract

Professional forecasters engage on a continuing basis in efforts to identify and refine leading indicators that can be used to enhance the accuracy of economic forecasts. Since the 1940s, the National Association of Purchasing Management (N.A.P.M.) has collected monthly business survey data which, until recent years, has been underutilized by professional economists. In this article the authors, both internationally recognized business cycle researchers, discuss the results of their study designed to evaluate the usefulness of this N.A.P.M. data series for purposes of economic forecasting. The authors conclude that the N.A.P.M. data dealing with prices, new orders, inventory changes, and vendor performance is indeed useful for forecasting purposes. A new N.A.P.M. leading index constructed by the authors appears to be a promising tool for monitoring the ebb and flow of the business cycles.The results of this research project were originally presented at the Sixth International Symposium on Forecasting in Paris, France in 1986. The work has been refined and updated for publication in this issue of the Journal.