Georgia Purchasing Managers Index (PMI) for June is up slightly from May

Manufacturing activity in Georgia was up slightly for the month of June‚ according to the

Georgia (Jul 1, 2008) — Georgia Purchasing Managers Index (PMI) for June is up slightly from May

Aixa Pascual

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Contact: Aixa M. Pascual‚ 678−797−2549 or apascual@kennesaw.edu

Georgia Purchasing Managers Index (PMI) for June is up slightly from May
Latest reading shows continued weakness in manufacturing; commodity prices reach record high‚ says KSU economics professor


KENNESAW‚ Ga.‚ (July 1‚ 2008) — Manufacturing activity in Georgia was up slightly for the month of June‚ according to the Econometric Center at Kennesaw State University’s Michael J. Coles College of Business.

Georgia’s Purchasing Managers Index (PMI) — a reading of economic activity in the state’s manufacturing sector — for June was 49.6‚ up 0.8 point from 48.8 in May‚ indicating continued weakness in manufacturing.

The latest Georgia figure reinforces a trend reflecting weakness in the manufacturing sector that has been apparent since December 2007. April’s PMI of 57.0 continues to look like an anomaly‚ with the last two months stabilizing around the average of 49.2 for the first three months of the year‚ said Don Sabbarese‚ professor of economics and director of the Econometric Center at the Coles College of Business.

“The manufacturing sector is no longer decreasing and has stabilized‚” Sabbarese said. “But it still remains concerned with weakness in the economy and their markets.”

The Georgia PMI provides a snapshot of manufacturing activity in the state‚ just as the monthly PMI released by the Institute for Supply Management provides a picture of national manufacturing activity. A PMI reading above 50 indicates that manufacturing activity is expanding. A reading below 50 indicates the manufacturing industry is contracting.

The national PMI registered 50.2 percent‚ up from 49.6 percent in May‚ after four months of contraction‚ according to the Institute for Supply Management.

The Georgia PMI reading is a composite of five variables —new orders‚ production‚ employment‚ supply deliveries and finished inventory. A sixth variable‚ commodity prices‚ is compiled by the Coles College’s Econometric Center but doesn’t go into the PMI calculation.

Though new orders surged by 11.1 points and production was up by 5.6 points‚ finished inventory was down by 12.9 points. Employment rose by 1.3 points.

“Employment’s very weak. I just don’t think manufacturers‚ given current economic conditions‚ are interested in hiring full−time workers‚” Sabbarese said. “We expect manufacturers to continue to be very vigilant regarding any unexpected changes in new orders.”

The commodity price reading of 92.9 for the June Georgia PMI‚ up from 92 in May‚ is at its highest level going back to 1991‚ when the Econometric Center first started compiling the data‚ Sabbarese said. Some 85.7 percent of manufacturers surveyed reported higher commodity prices from the previous month.

Rising commodity prices not only raise manufacturers’ costs and cuts into profits‚ but also affect hiring policies. As higher commodity prices take a bite out of earnings‚ these manufactures continue to maintain very conservative hiring practices‚ as illustrated by June’s employment reading of 39.3.

The PMI‚ compiled from a monthly survey of manufacturers‚ is the earliest indicator of market conditions in the sector. Since manufacturing is sensitive to changes in the economy‚ it can also reveal changing macroeconomic trends‚ even if manufacturing accounts for only 13 percent of gross domestic product (GDP).

The PMI’s value is in its timeliness and sensitivity to variables such as interest rates‚ global markets and other economic changes. The Georgia PMI provides valuable data that the Federal Reserve Bank of Atlanta analyzes‚ along with many other data sources‚ to get a picture of economic activity.

For a full report of the June PMI or to schedule an interview with Professor Don Sabbarese‚ please contact Aixa M. Pascual at 678−797−2549 or apascual@kennesaw.edu.

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A member of the 35−unit University System of Georgia‚ Kennesaw State University is a comprehensive‚ residential institution with a growing student population of more than 20‚000 from 142 countries. The third−largest university in Georgia‚ Kennesaw State offers more than 65 graduate and undergraduate degrees‚ including doctorates in education and business.


 

A leader in innovative teaching and learning, Kennesaw State University offers more than 150 undergraduate, graduate and doctoral degrees to its approximately 41,000 students. With 11 colleges on two metro Atlanta campuses, Kennesaw State is a member of the University System of Georgia and the third-largest university in the state. The university’s vibrant campus culture, diverse population, strong global ties and entrepreneurial spirit draw students from throughout the region and from 92 countries across the globe. Kennesaw State is a Carnegie-designated doctoral research institution (R2), placing it among an elite group of only 6 percent of U.S. colleges and universities with an R1 or R2 status, and one of the 50 largest public institutions in the country. For more information, visit kennesaw.edu

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