Georgia Purchasing Managers Index (PMI) for March continues upward trend
Index is up for third consecutive month; new orders‚ production and employment show dramatic…
Georgia (Apr 6, 2009) — Georgia Purchasing Managers Index (PMI) for March continues upward trend
Aixa Pascual
Abstract
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Frances Weyand Harrison
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Contact: Aixa M. Pascual‚ 678−797−2549‚ or apascual@kennesaw.edu
Georgia Purchasing Managers Index (PMI) for March continues upward trend
Index is up for third consecutive month; new orders‚ production and employment show
dramatic increase‚ says KSU economics professor
KENNESAW‚ Ga.‚ (April 2‚ 2009) — Manufacturing activity in Georgia continued to improve for the third consecutive
month‚ driven by healthy increases in new orders‚ employment and production‚ 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 March was 45.4‚ an increase of 5 points from February.
This reading illustrates that manufacturing is contracting‚ but at a slower rate than
it was last year‚ and caps three months of gains for the Georgia PMI. The PMI is up
18.6 points this year.
“The latest numbers reveal that manufacturing shrank at a slower rate in the first
quarter of 2009‚” said Don Sabbarese‚ professor of economics and director of the Econometric
Center at the Coles College of Business. “The gradual improvement in the sector‚ after
months of decline‚ is good news.”
Double−digit increases in new orders‚ production and employment drove the rise in
the PMI. New orders were up by 10.7 points‚ to 51.8; production was up 12.5 points‚
to 51.8; and employment was up by 10.7 points‚ to 41.1. Considerably fewer of the
survey participants reported lower levels in new orders‚ production and employment.
(The PMI is a diffusion index‚ so it does not measure the quantitative size of increases
in the variables‚ but the percentage of survey participants experiencing increases
versus no change and decreases.)
Employment remains low and firms will need to be convinced that this uptick in new
orders will continue over a longer period of time before they start reversing layoffs
and hiring freezes. “We are not close to that point yet‚” 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 it is contracting.
Georgia’s PMI of 45.4 is now 9.1 points above the national PMI of 36.3. Georgia’s
new orders‚ production and employment are currently higher than the national readings.
Since the Georgia PMI historically has been more volatile than the national PMI‚ more
data is needed to verify if this higher trend is just an aberration or the two measures
will move closer together in the future.
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.
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 April 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 kennesaw.edu.
