Georgia Purchasing Managers Index (PMI) for November continues decline

PMI reading at lowest level in seven years; new orders keep falling‚ employment exceptionally low‚…

Georgia (Dec 8, 2008) — Georgia Purchasing Managers Index (PMI) for November continues decline

Aixa Pascual

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Frances Weyand Harrison
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Georgia Purchasing Managers Index (PMI) for November continues decline
PMI reading at lowest level in seven years; new orders keep falling‚ employment exceptionally low‚ says KSU economics professor


KENNESAW‚ Ga.‚ (Dec. 5‚ 2008) — Manufacturing activity in Georgia continued to decline in November and reached its lowest level since November 2001‚ the trough in the 2001 recession‚ 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 November was 32.7‚ a decline of 1.3 points from October. This reading is consistent with the 0.3 percent decline in Gross Domestic Product (GDP) in the third quarter and raises the likelihood that GDP will contract again in the fourth quarter of 2008.

“The manufacturing sector continues to sink under the weight of a stream of bad news for the U.S. and global economies‚” said economics professor Don Sabbarese‚ director of the Econometric Center at the Coles College of Business. “There are no encouraging signs for manufacturers at this point.”

Weakness in new orders continues to put downward pressure on all the other PMI variables. New orders for November were extremely low‚ with only 9.1 percent of survey participants reporting an increase in new orders. Production actually increased by 7.3 points‚ but remains very anemic at 27.3‚ with 63.6 percent of participants reporting lower production. Employment also went up‚ with 18.6 percent of respondents reporting higher employment‚ after two months in which no respondents reported growth. Unemployment‚ however‚ remains extremely low‚ at 38.6‚ Sabbarese said.

Manufacturers continue to operate at a scaled−down level‚ with little incentive to plan for expansion in the next three months‚ Sabbarese said. Manufacturers are nervous about tightness in the credit markets and the global slowdown. Uncertainty about the extent and duration of housing and financial problems has forced a wide range of survey respondents to put business decisions on hold‚ Sabbarese said.


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 for November was 36.2 percent‚ a decline of 2.7 points from October.

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 does not go into the PMI calculation.

As in October‚ the only bright spot in the November PMI was the drop in commodity prices‚ to 22.7 points. While cheaper commodity prices lower production costs‚ they reflect lower demand due to a global economic slowdown.

The PMI‚ compiled from a monthly survey of manufacturers‚ is the earliest indicator of market conditions in the sector. Since manufacturing –– which accounts for 13 percent of GDP –– is sensitive to changes in the economy‚ it can also reveal changing macroeconomic trends.

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 used by institutions such as the Federal Reserve Bank of Atlanta to assist in their analysis of current economic conditions‚ along with many other data sources‚ to get a picture of economic activity.

For a full report of the November PMI‚ or to speak with professor Sabbarese‚ please call (770) 423−6094.


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Kennesaw State University is the third−largest university in Georgia‚ offering more than 65 graduate and undergraduate degrees‚ including new doctorates in education and business. A member of the 35−unit University System of Georgia‚ Kennesaw State is a comprehensive‚ residential institution with a growing student population of more than 21‚000 from 142 countries.



A leader in innovative teaching and learning, Kennesaw State University offers more than 150 undergraduate, graduate and doctoral degrees to its more than 35,000 students. With 13 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. A Carnegie-designated doctoral institution, it is one of the 50 largest public institutions in the country. For more information, visit kennesaw.edu.

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