Georgia manufacturing index accelerates in February

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Georgia PMI is up by 8.7 points based on double-digit increases for new orders and production…

Georgia (Mar 1, 2011)Georgia PMI is up by 8.7 points based on double-digit increases for new orders and production

KENNESAW, Ga. (March 1, 2011) — Manufacturing activity in Georgia jumped in February to its highest level since March 2010,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 February was 62.5, up 8.7 points from January’s level of 53.8. The latest reading reveals a manufacturing sector with an increased number of respondents experiencing growth. Fifty percent of respondents reported higher new orders, and 42 percent reported higher levels of production. The Georgia February PMI is now 1.1 point higher than its national counterpart, compared to its reading of 4.8 points below in January.

“Employment increased to 64.6, as 33 percent of respondents reported higher employment versus only 4 percent reporting lower employment. Employment has been stable with steady improvement for the past three months,” said Don Sabbarese, professor of economics and director of the Econometric Center at the Coles College of Business. “Higher employment for a growing number of manufacturers is the strongest indication that current market conditions are sustainable.”

Eighty three percent of manufacturers expect higher production in the next three to six months, as opposed to 58 percent in January.

Highlights of the February PMI include:

  • New orders were up by 13 points, to 68.8
  • Production was up by 14.7 points, to 66.7  
  • Hiring was up by 1.1 point, to 64.6, with 33 percent of respondents reporting increased employment
  • Commodity prices increased another 2.7 points, to 85.4
  • Finished inventory increased 9.8 points, to 52.1
  • Supplier delivery time increased 4.6 points, to 60.4

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

 

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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

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