Georgia Purchasing Managers Index for April up for fourth consecutive month
PMI continues upward trend‚ fueled by sharp growth in finished inventory‚ says KSU economics…
Georgia (May 5, 2009) — Georgia Purchasing Managers Index for April up for fourth consecutive month
Aixa Pascual
Abstract
Director of University Relations
Frances Weyand Harrison
770−423−6203
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Contact: Aixa M. Pascual‚ 678−797−2549 or apascual@kennesaw.edu
Georgia Purchasing Managers Index for April up for fourth consecutive month
PMI continues upward trend‚ fueled by sharp growth in finished inventory‚ says KSU
economics professor
KENNESAW‚ Ga. (May 1‚ 2009) — Manufacturing activity in Georgia continued to improve
for the fourth consecutive month‚ driven primarily by a healthy boost in finished
inventory‚ as well as by a slight improvement in new orders‚ production and employment‚
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 April was 48.6‚ an increase of 3.2 points from
March. This reading illustrates that manufacturing is contracting‚ but at a much slower
rate than it was in the fourth quarter of 2008. The PMI is up 21.8 points this year.
“The latest numbers indicate that the improvement over the last four months may indeed
be sustainable. Manufacturing is still contracting‚ but it’s doing so at a much slower
pace than it was last year‚” said Don Sabbarese‚ professor of economics and director
of the Econometric Center at the Coles College of Business. “Each month the index
improves is encouraging.”
Finished inventory grew by a dramatic 13 points in April‚ to 52.3‚ the highest level
in 11 months. In April‚ 22.7 percent of survey respondents reported a reduction in
inventory‚ compared to 42.9 percent in March. Inventory‚ however‚ can be pretty volatile
and it is not clear whether the growth was planned or not. Since new orders and production
have been increasing over the last few months‚ and since inventory reduction in the
first quarter GDP report was substantial‚ it may be possible the inventory increase
was intentional.
The April PMI –– unlike the double−digit increases in new orders‚ production and employment
registered in March ––showed increases in all its underlying variables‚ but most were
on a small scale. New orders were up by just 0.5 of a point‚ to 52.3 points; production
was up 0.5 of a point‚ to 52.3; and employment was up by 2.1 points‚ to 43.2.
Employment still remains weak‚ but has shown great improvement over the past few
months. In December 2008‚ 68.2 percent of survey respondents reported lower employment‚
whereas only 22.7 percent reported lower employment for April. “While only 9.1 percent
of respondents are hiring‚ the sharp drop in the percent of manufacturers laying off
workers is encouraging‚” 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.
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. Commodity prices in April were up by 6.5 points‚ to 38.6‚ but
remain low.
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‚ business and nursing. 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‚500 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.
