Monday, November 27, 2006
Ivey Purchasing Managers Index
Every month the University of Western Ontario's Richard Ivey School of Business and the Purchasing Management Association of Canada (PMAC) publish the Ivey Purchasing Managers Index. I'm not sure who uses the index, or where the value lies in the data they publish. One of the first things you'll notice is that there is huge month-to-month variance in the data, as shown in the table below, from October 2006. The FAQ for the site addresses the "jumpiness" by stating they don't adjust for seasonality, inflation, and covers the entire Canadian economy. As a buyer, I don't see how I could use this index to lower my cost of purchased goods and services. I wonder if the economists out there place value on it that I don't see.
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It's tough to seasonally-adjust a young index with any reasonable confidence.
ReplyDeletePerhaps the IPMI is now just another noisy bit of data for determining whether or not the broad economy is expanding or contracting but will become progressively more useful as the time series extends.
I trolled around the IPMI site to see how long it's been running, it's not clear but they do provide a "most recent 24 month" data link. I took another look at the source of the data and I think that is more troublesome than the age of the index. Ivey canvasses 175 buyers each month and asks a variation of "Did you buy more or less" than last month". I think few of the people they canvass actually know empiracly whether their business volume is up or down, so the index seems to be more of a buyer's confidence index. Not sure that is in itself bad, but does help explain (in my mind) why the data is so variable.
ReplyDelete"empirically"
ReplyDeletePer the FAQ on the site ( http://iveypmi.uwo.ca/english/faq.htm#ivey ) "Ivey and PMAC agreed to launch the Ivey Purchasing Managers Index on December 7, 2000."
ReplyDeleteThe Ivey question doesn't appear to me to be different in style or approach from the five posed in the U.S. for the widely-followed ISM Report on Business (cf. http://www.ism.ws/ISMReport/content.cfm?ItemNumber=10706&navItemNumber=12957 )