Georgia manufacturing index for April rises again
Georgia PMI shows continued improvement, with third consecutive month of above-50
readings,…
Georgia
(May 4, 2010) —
Georgia PMI shows continued improvement, with third consecutive month of above-50
readings, says KSU economics professor
KENNESAW, Ga. (May 3, 2010) — Manufacturing activity in Georgia continued to show strong signs of improvement in
April as manufacturers experienced an uptick in new orders, according to the Econometric
Center at Kennesaw State University’s Coles College of Business.
Georgia’s Purchasing Managers Index (PMI) — a reading of economic activity in the
state’s manufacturing sector — for April was 63.3, up 2.0 points from March, marking
the third consecutive month of readings above 50 points. The April PMI is 10.6 points
above the index’s six-month average and shows that more and more manufacturers are
doing better. New orders are looking strong, with 21 percent more survey respondents
reporting higher new orders since the beginning of the year.
“With each passing month, the recovery in manufacturing is getting stronger and more
sustainable,” said Don Sabbarese, professor of economics and director of the Econometric
Center at the Coles College of Business. “We are very encouraged with the gains that
we are seeing. If this upward trend continues, we should see improvements in other
sectors of the economy very soon.”
Highlights of the April PMI include:
· New orders, up by 15.4 points to 76.7, showed strong gains, with 63.3 percent of respondents
reporting higher new orders and only 10 percent reporting lower new orders
· Hiring continues to improve since January, with 20 percent of survey respondents doing
more hiring, compared to 5.3 percent in January
· Though production slipped 4.2 points, to 68.3, it still remains at very high levels.
Some 46.7 percent of survey respondents reported an increase in production, compared
to 10 percent of respondents reporting a decline in production
· Commodity prices remain high, rising by 1.1 points to 83.3. Some 66.7 percent of respondents
reported higher prices, compared to zero respondents reporting lower commodity prices.
This does not seem to be a problem for manufacturers yet, with declines in labor costs
and higher productivity, but will be when these positive trends reverse
· Finished inventory declined 6.5 points, to 50, not unusual as new orders showed gains
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 national
PMI for April was 60.4 points, up 0.8 point from March.
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 11 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.
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.
