Georgia manufacturing index moves up in April


Georgia manufacturing index moves up in April Georgia PMI registers third consecutive reading above…

Georgia (May 1, 2012)Georgia manufacturing index moves up in April

Georgia PMI registers third consecutive reading above 60 as new orders, production rise

KENNESAW, Ga.  (May 1, 2012)  —  Manufacturing activity in Georgia continued to gain steam in April, 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 up 3.1 points, to 63.8, due to an increase in both new orders and production.  The PMI is at its highest level since May 2011.

“The strength of the Georgia PMI and its underlying components illustrates a rapid improvement in manufacturing,” said Don Sabbarese, professor of economics and director of the Econometric Center at the Coles College of Business. “Between December and April, we have seen a marked increase in the number of survey respondents who are reporting higher new orders and production.”

Other highlights of the April PMI include:

·         New orders were up 4.4 points, to 72.9

·         Production was up 6.3 points, to 72.9

·         Employment was down 3.2 points, to  54.2

·         Supplier delivery time was up 3.0 points, to 60.4

·         Finished inventory increased 4.6 points, to 58.3

·         Commodity prices were down 1.6 points, to 68.8

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. Georgia’s PMI of 63.8 outperformed the national PMI reading of 54.8  by 9 points. 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 April PMI, or to speak with professor Sabbarese, please call 770-423-6094.


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