Georgia manufacturing index declines again in June

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Georgia manufacturing index declines again in June PMI drops 6.9 points, slipping below 60 for…

Georgia (Jul 2, 2012)Georgia manufacturing index declines again in June

PMI drops 6.9 points, slipping below 60 for first time in five months

KENNESAW, Ga.  (July 2, 2012)  —  Manufacturing activity in Georgia declined significantly in June, accordingto the Econometric Center at Kennesaw State University’s Michael J. Coles College of Business. 

Georgia’s Purchasing Managers Index (PMI)  —  a reading of economic activity in the state’s manufacturing sector  — was down 6.9 points from May, to 55, as  new orders and production  continued to slide. New orders fell 11.8 points, to 53.6; production declined by 10 points, to 55.4. Georgia’s PMI, however, continues to outperform the national PMI reading of 49.7.

“While the Georgia PMI is still above the national figure, Georgia’s decline of 8.8 points over the past two months is significant,” said Don Sabbarese, professor of economics and director of the Econometric Center at the Coles College of Business. “New orders and production for June are 9.5 and 5.8 points below their six-month averages, respectively.”

Other highlights of the June PMI include:

·         Employment was up 3.3 points, to  57.1

·         Supplier delivery time was down 9.6 points, to 50

·         Finished inventory decreased 6.5 points, to 58.9

·         Commodity prices were down 8.8 points, to 39.3

 

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




A leader in innovative teaching and learning, Kennesaw State University offers more than 150 undergraduate, graduate and doctoral degrees to its approximately 38,000 students. With 13 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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