Georgia Purchasing Managers Index (PMI) for February shows slight improvement

Index is up for second consecutive month; new orders‚ production and finished inventory continue…

Georgia (Mar 3, 2009) — Georgia Purchasing Managers Index (PMI) for February shows slight improvement

Aixa Pascual


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Frances Weyand Harrison

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Georgia Purchasing Managers Index (PMI) for February shows slight improvement
Index is up for second consecutive month; new orders‚ production and finished inventory continue slow recovery‚ says KSU economics professor

KENNESAW‚ Ga. (March 3‚ 2009)
— Manufacturing activity in Georgia continued to improve slightly after a months−long decline that hit bottom last December‚ 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 February was 40.4‚ an increase of 5 points from January. This reading‚ which illustrates continued weakness‚ was supported by healthy increases in new orders‚ production and finished inventory.

“The latest numbers reveal that manufacturing may have reached bottom in the fourth quarter of 2008‚” said Don Sabbarese‚ professor of economics and director of the Econometric Center at the Coles College of Business. “While this is certainly good news — should the recovery continue in the coming months — the manufacturing sector remains anemic due to growing domestic and global economic weakness.”

Most manufacturers continue to operate in an uncertain environment‚ which means these short−term improvements do not indicate a shift in their pessimism about current market conditions‚ Sabbarese said.

“Firms will respond to a jump in new orders by boosting production without hiring more workers or buying new equipment‚” he explained. “When they are finally convinced that a bump in new orders is permanent‚ then they will be willing to hire more workers and buy more capital. That point is a long way off.”

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.

Georgia’s PMI recorded its first reading above the national PMI‚ which was 35.8 percent for February‚ since April 2008. Georgia’s sharp improvements for new orders — up 8.4 points‚ to 41.1 — and production — up 10.4 points‚ to 39.3 — are the reason for this upswing. Finished inventory also got a lift‚ in response to new orders and production. Since the Georgia PMI historically has been more volatile than the national PMI‚ more data is needed to verify if this is a trend or just an aberration.

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.

It is still too early to tell if Georgia’s PMI improvement for January and February‚ while encouraging‚ marks a sustainable rebound from its fourth−quarter lows. Employment remains very weak at 30.4 points‚ but is still higher than December’s all−time low of 20.5.

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 February 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 nearly 43,000 students. With 11 colleges on two metro Atlanta campuses, Kennesaw State is a member of the University System of Georgia. The university’s vibrant campus culture, diverse population, strong global ties and entrepreneurial spirit draw students from throughout the country and the world. 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