Georgia manufacturing index accelerates again in March

Sabbaresepicture1.JPG

Jump of 5.1 points due to strong increases in production, employment and finished inventory…

Georgia (Apr 1, 2011)Jump of 5.1 points due to strong increases in production, employment and finished inventory

KENNESAW, Ga. (April 1, 2011) — Manufacturing activity in Georgia jumped in March to its highest level since April 2006,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 — was 67.6 in March, up 5.1 points from February’s level of 62.5. The latest reading reveals a growing number of respondents experiencing growth. Nearly 52 percent of respondents reported higher new orders, and almost 58 percent reported higher levels of production. Even more significant is 42 percent of respondents reported increased hiring versus only 3 percent reporting a decrease. Georgia’s March PMI recorded 6.4 points higher than its national counterpart.

“As new orders remain high at 69.7 and production increases even more, the sharp increase in finished inventory is stronger evidence that these respondents believe this uptick in business is sustainable,” said Don Sabbarese, professor of economics and director of the Econometric Center at the Coles College of Business. “Added support for this point is the 42 percent of respondents who reporting increased hiring.”

The higher commodity price reading of 90.9 is the one negative in the March report. Rising commodity prices will begin to put pressure on profit margins for those manufacturers who cannot increase their prices.

Highlights of the March PMI include:

  • New orders were up by 0.9 of a point, to 69.7
  • Production was up by 9.1 points, to 75.8  
  • Hiring was up 5.1 points, to 69.7, only 3 percent report decreased hiring
  • Commodity prices increased another 5.5 points, to 90.9, its highest level since June 2008
  • Finished inventory increased 8.5 points, to 60.6
  • Supplier delivery time increased 1.7 points, to 62.1

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 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 March PMI, or to speak with professor Sabbarese, please call 770- 423-6094. 

 

# # #

 

Kennesaw State University is the third-largest university in Georgia, offering more than 70 graduate and undergraduate degrees, including new doctorates in education, business and nursing, and a new Ph.D. in international conflict management. A member of the 35-unit University System of Georgia, Kennesaw State is a comprehensive, residential institution with a growing population of more than 23,400 students from 142 countries.



 

A leader in innovative teaching and learning, Kennesaw State University offers more than 150 undergraduate, graduate and doctoral degrees to its approximately 41,000 students. With 11 colleges on two metro Atlanta campuses, Kennesaw State is a member of the University System of Georgia and the third-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 92 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, and one of the 50 largest public institutions in the country. For more information, visit kennesaw.edu

©