US Purchasing Managers’ Index and its Impact on Korea and US

US Purchasing Managers’ Index and its Impact on Korea and US

Purpose - The study is to examine the impact of the US Purchasing Managers’ Index (PMI) on Korea and the US industrial economy including the distribution industry. We analyze its effect on the industrial economy centered on the distribution industry using economy indices in Korea and the US. Research design, data, and methodology – The variables are used to analyze the dynamic relationship which occurs among the US PMI, the industrial production index, producer price index, unemployment rate, and manufacturing Inventories Index in Korea and the US from January 1990 to July 2016 using Vector Error Correction Model. Results – As a main result, the impact of the US PMI on all the economy indices both Korea and the US has the same cyclical movement. The US PMI is positively related to the producer price and the industrial production index of Korea and the US, while it is negatively related to unemployment rate, and the manufacturing inventories index in Korea and the US. Conclusions - The US PMI as an advanced index has a power to predict the economies on Korea and the US. In the end, we find that the US PMI has a great impact on Korea and the US industrial economy.