Georgia manufacturing index rebounds after three-month decline
Purchasing Managers Index is up 6 points for November, says KSU economics professor
(Dec 2, 2010) —
KENNESAW, Ga. (Dec. 2, 2010) — Manufacturing activity in Georgia rebounded in November after three consecutive months
of decline, 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 November was 56.3, up 6 points from the previous
month’s level of 50.3. The latest reading reverses the PMI’s 13-point drop from May
to October. All of the PMI’s underlying variables for November, except for production,
were above their six-month averages.
“The improvement in November’s manufacturing numbers has at least temporarily realigned
Georgia with the national PMI,” said Don Sabbarese, professor of economics and director
of the Econometric Center at the Coles College of Business. “These two readings had
been diverging for a while, with substantial differences in their underlying variables.”
Some 46 percent of respondents surveyed said they expected higher production in the
next three to six months, compared to 21 percent in October, said Sabbarese.
Highlights of the November PMI include:
· New orders were up by 11.3 points, to 57.8
· Production increased 4.8 points, to 53.1
· Hiring is up 4.5 points, to 56.3. Some 25 percent of respondents reported
higher employment, compared to 13.8 percent in October
· Commodity prices remain flat, with a 0.3-point increase to 64.1
· Finished inventory ticked up 4.8 points, to 53.1
· Supplier delivery time was up 4 points, to 60.9, which is consistent with
the increases in new orders and production
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 November was 56.6, down 0.3 point from October.
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 November PMI, or to speak with professor Sabbarese, please
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