Impact of manufacturing PMI on stock market index: A study on Turkey

Abstract

Purchasing Managers' Index (PMI) is an indicator to measure the health of an economy. PMI is considered by policymakers and related bodies as it is an influential indicator for gauging the general tendency of the economy, especially GDP growth and Industrial Added Value. This study examines whether the manufacturing PMI has any influence on the stock market of Turkey or vice versa. We use the secondary sources of information collected from the official website of BIST, Turkey for Stock Index data and "investing.com" for Manufacturing PMI data. The study covers monthly data ranging from April 2015 to February 2019. We test the causality between Manufacturing PMI and BIST index through employing the Granger Causality Test. Our analysis reveals that manufacturing PMI does not granger cause the Turkish Stock Index but the Turkish Stock index or the stock market does granger cause manufacturing PMI.