Georgia Purchasing Managers Index for July up for first time in three months


  KENNESAW, Ga. (August 4, 2009)  —  Manufacturing activity in Georgia was…

Georgia (Aug 4, 2009) —  

KENNESAW, Ga. (August 4, 2009)  —  Manufacturing activity in Georgia was up for July, after two months of decline, led by increases in new orders 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 July was 47.3, up 3 points from June. At under 50, the reading illustrates that manufacturing continues to contract, though at a slower rate than in the first quarter of 2009. Manufacturers are still cautious about hiring, despite new orders jumping by 9.3 points.
“Companies continue to respond to changes in new orders month by month,” said Don Sabbarese, professor of economics and director of the Econometric Center at the Coles College of Business. “In July, manufacturers increased production, but with only a very minimal increase in new hires. In fact, some participants are still cutting back on their labor force.”
At 31.8, employment remains very low, and much below the national average, Sabbarese said.
Highlights of the July PMI include:
·         Employment was up 0.9 of a point, to 31.8;
·        New orders jumped 9.3 points to 54.5, its highest reading since July 2008;
·        Production was up 16.1, to 61.4, its highest reading for the year;
·        Commodity prices decreased for the first time since March.
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.
The PMI, compiled from a monthly survey of manufacturers, is the earliest indicator of market conditions in the sector. Since manufacturing –– which accounts for 12 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 July PMI, or to speak with professor Sabbarese, please call (770) 423-6094.



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