Georgia manufacturing index for March rises again
Georgia PMI shows strong signs of improvement, with second consecutive month of above-50
(Apr 1, 2010) — Georgia PMI shows strong signs of improvement, with second consecutive month of above-50
readings, says KSU economics professor
KENNESAW, Ga. (April 1, 2010) — Manufacturing activity in Georgia showed strong signs of growth in March, according
to the Econometric Center at Kennesaw State University’s Coles College of Business. Employment, which had remained weak for months, has started to show solid gains.
Georgia’s Purchasing Managers Index (PMI) — a reading of economic activity in the
state’s manufacturing sector — for March was 61.3, up 4.9 points from February. The
March PMI is 7 points above the index’s six-month average, and is more in synch with
the national PMI. The various variables underlying the Georgia PMI –– new orders,
production, employment, supply deliveries and finished inventory –– have improved
dramatically in the first three months of the year.
In February, the PMI recorded its highest reading since April 2008. The March reading
continued to ride on that trend, with the PMI now up 15.2 points for the first three
months of 2010.
“We are finally seeing signs of solid growth in manufacturing,” said Don Sabbarese,
professor of economics and director of the Econometric Center at the Coles College
of Business. “Employers are starting to hire with more confidence, and their production
is up. This may as well signal the beginning of manufacturing’s recovery after months
of sluggishness, and we hope this continues over the next few months.”
Highlights of the March PMI include:
· Hiring has gained momentum, with employment up 5.1 points, to 59.7 points
· Though new orders slipped 3.9 points, to 61.3 points, they are still strong. Some
42 percent of survey respondents reported an increase in new orders, compared to 19.4
of respondents reporting a decline in new orders
· Production showed the strongest gains, up by 16.5 points, to 72.6 points. More than
half of survey respondents reported increases in production. Only 6.5 of respondents
reported lower production
· Commodity prices rose 9.5 points, to 82.3 points, the highest reading since July 2008.
Some 64.5 percent of respondents reported higher commodity prices
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 March was 59.6, up 3.1 points from February.
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
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 March PMI, or to speak with professor Sabbarese, please call
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