A1 Journal article (refereed)
Nowcasting the nowcasting : Forecasting ISM Business surveys (PMI and NSI) with weekly Google trends (2024)

Heikkinen, J., & Heimonen, K. (2024). Nowcasting the nowcasting : Forecasting ISM Business surveys (PMI and NSI) with weekly Google trends. Applied Economics, 56(51), 6300-6313. https://doi.org/10.1080/00036846.2023.2273235

JYU authors or editors

Heikkinen, Joni
Heimonen, Kari

Publication details

All authors or editors: Heikkinen, Joni; Heimonen, Kari

Journal or series: Applied Economics

ISSN: 0003-6846

eISSN: 1466-4283

Publication year: 2024

Publication date: 30/10/2023

Volume: 56

Issue number: 51

Pages range: 6300-6313

Publisher: Routledge

Publication country: United Kingdom

Publication language: English

DOI: https://doi.org/10.1080/00036846.2023.2273235

Publication open access: Openly available

Publication channel open access: Partially open access channel

Publication is parallel published (JYX): https://jyx.jyu.fi/handle/123456789/92006

Abstract

Changes in economic conditions can occur suddenly with drastic effects. However, economic statistics are published with significant lags, e.g. GDP, and more timely information about the economy is required. Nowcasting methods have become widely popular for providing up-to-date information about the current economic stance. This study adds a novel idea to the previous literature by nowcasting the nowcasting, i.e. the purchasing manager’s index (PMI) and the non-manufacturing survey index (NSI) of the ISM Business survey indicators with the weekly Google Trends data. We used two-dimension reduction methods: the principal component analysis (PCA) and partial least squares (PLS) to eliminate ‘the curse of dimensionality’. Pseudo-out-of-sample exercises performed with different Google Trends search categories indicated that Google Search data is able to generate useful information to nowcast the nowcasting. In particular, we contribute the existing literature that weekly Google Search data can nowcast the monthly PMI and NSI.

Keywords: economic forecasts; forecasts; enterprises; economic indicators; information; information retrieval; Google