Georgia manufacturing index at lowest level in almost two years


Georgia manufacturing index down 9.4 points, at lowest level in almost two years With PMI below 50…

Georgia (Oct 4, 2011)Georgia manufacturing index down 9.4 points, at lowest level in almost two years

With PMI below 50, manufacturing activity for September contracted  

KENNESAW, Ga.  (Oct. 4, 2011) — Manufacturing activity in Georgia fell to its lowest level since January 2010, amidst increasing volatility, accordingto 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 September was 48.7, down 9.4 points from August. This is the third month in a four-month period that the PMI declines, dashing expectation that August’s turnaround was sustainable. The losses in manufacturing were driven by declines in all underlying variables.

“September’s losses more than offset the 7.4 points gained in August,” said Don Sabbarese, professor of economics and director of the Econometric Center at the Coles College of Business. “The latest reading suggests the perceived soft spot in June and July may be more pervasive than we first thought. Manufacturing has been one of the few bright spots in the current recovery, but apparently it’s not immune from the current slowdown in the broader economy.”

Other highlights of the September PMI include:

·         Production declined by 16.3 points, to 46.7

·         New orders were down by 6.9, to 45

·         Employment was down by 5.6, to 50

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


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