Georgia manufacturing index jumps 8.7 points in February


Georgia manufacturing index jumps 8.7 points in February PMI is up 13.6 points for first two months…

Georgia (Mar 2, 2012)Georgia manufacturing index jumps 8.7 points in February

PMI is up 13.6 points for first two months of 2012


KENNESAW, Ga.  (March 2, 2012) — Manufacturing activity in Georgia was up in February, with the first two months of 2012 ushering in a reversal of the decline in the latter half of 2011, 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 up 8.7 points in February, to 61.A reading above 50 indicates expansion. The Georgia PMI has shown solid improvement for all its underlying components, except for supplier delivery time. Employment was up 5 points as a result of double-digit growth in new orders and production.

“The improvement in the February figures is further evidence that manufacturing is on the rise in 2012 and that it may be sustainable,” said Don Sabbarese, professor of economics and director of the Econometric Center at the Coles College of Business. “As more respondents see higher new orders and production, the probability of sustained growth improves. Also, we saw a big increase in the number of respondents who expect higher production over the next three to six months.”

Other highlights of the February PMI include:

·         New orders were up 18.3 points, to 68.3

·         Production was up 20 points, to 63.3

·         Employment was up 5 points, to 58.3

·         Supplier delivery time was down 5.0 points, to 56.7

·         Finished inventory increased 5.0 points, to 58.3

·         Commodity prices were up 8.3 points, to 65.0

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. The national PMI was down 1.7 points, to 52.4, for February. 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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