Georgia manufacturing index up 9.2 points in November


Georgia manufacturing index up 9.2 points in November PMI increase is first in three months, says…

Georgia (Dec 1, 2011)Georgia manufacturing index up 9.2 points in November

PMI increase is first in three months, says KSU economics professor

KENNESAW, Ga.  (Dec. 1, 2011)  —  Manufacturing activity in Georgia was up for the first time in the last three months, 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 52.4, the highest reading since July. Increases in new orders and production were primarily responsible for the sharp rebound. Finished inventory was up 21 points, which suggests manufacturers anticipate continued growth.

“New orders were at their highest level since June, when the index started to slump,”  said Don Sabbarese, professor of economics and director of the Econometric Center at the Coles College of Business. “This may signal a turning point for Georgia manufacturers. New orders typically lead the other variables in the index, as was the case in November.”

Other highlights of the November PMI include:

·         New orders increased 9.7 points, to 58.1

·         Production increased 10.5 points, to 54.1

·         Employment increased 3.2 points, to 50

·         Supplier delivery time increased 1.6 points, to 50

·         Commodity prices decreased 5.7 points, to 45.9

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


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