Southeast manufacturing index for April is at highest point since 2006

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  Southeast manufacturing index  (SPMI) is up 3.4 points, says KSU economics professor…

Georgia (May 7, 2010) —  

Southeast manufacturing index  (SPMI) is up 3.4 points, says KSU economics professor

                                                                                                                          
KENNESAW, Ga. (May 7, 2010) — Manufacturing activity in the southeastern United States was up by 3.4 points for April, to the index’s highest reading since 2006, according to the Econometric Center at Kennesaw State University’s Coles College of Business. 
 
The Southeast Purchasing Managers Index (SPMI) — a reading of manufacturing activity in the six-state Southeast  — for April was 63.3, continuing the strong uptick that started in January. The April reading represents 10.2 points higher than the SPMI’s six-month average. The index’s underlying variables have registered a similar impressive trend, with strong showings in new orders and production.  
 
The Southeast PMI encompasses Alabama, Florida, Georgia, Louisiana, Mississippi and Tennessee, corresponding with the territory served by the Sixth Federal Reserve District.
 
“Manufacturing activity grew in five of the six states, with Louisiana showing the strongest gains. Georgia, Mississippi and Tennessee were the top performers for April, while Florida registered the lowest numbers,” said Don Sabbarese, professor of economics and director of the Econometric Center at the Coles College of Business. “We continue to see the beginnings of a recovery that hopefully will continue over the next few months.”  
 
The Southeast PMI for April is 17.5 points higher than its January reading of 45.8. April’s 63.3 reading exceeded, for the first time, the national PMI, by 2.9 points. Until last month, the Southeast PMI lagged behind the national PMI.
 
“The Southeast PMI tends to be more volatile than the national PMI, but as we go forward, it should track the national figures,” Sabbarese said.
 
 
Highlights of the April SPMI include:
 
·         New orders increased in the double digits, by 11.1 points, to 78.3, 17.3 points above its six-month average. Some 64.5 percent of survey respondents reported higher new orders, while only 7.9 percent reported a decline
·         Production was up 3 points, to 73, 14.6 points above its six-month average. Some 53.9 percent of respondents reported higher production, while only 7.9 percent reported a decline
·         April employment was down by 1.2 points, but remains more than 6 points above its six-month average. Some 14.5 percent of respondents reported increased hiring, while only 3.9 percent showed a decline
·         More manufacturers are feeling optimistic about a recovery: 62 percent said they expect production to increase in the next three to six months, compared to 60 percent in March
 
 
The Southeast PMI provides a snapshot of manufacturing activity in the six-state Southeast, 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 is 0.8 of a point higher at 60.4.
 
The SPMI 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 SPMI 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 Southeast PMI, or to speak with professor Sabbarese, please call (770) 423-6094. 


 

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