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
Abstract
Director of University Relations
Frances Weyand Harrison
770−423−6203
fharris4@kennesaw.edu
Contact: Aixa M. Pascual‚ 678−797−2549‚ or apascual@kennesaw.edu
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.
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 undergraduate, graduate and doctoral degrees to its more than 41,000 students. With 11 colleges on two metro Atlanta campuses, Kennesaw State is a member of the University System of Georgia and the second-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 126 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. For more information, visit kennesaw.edu.
