Georgia manufacturing index remains flat for March


Georgia manufacturing index remains flat for March Second PMI reading above 60 allows for strong…

Georgia (Apr 3, 2012)Georgia manufacturing index remains flat for March

Second PMI reading above 60 allows for strong first-quarter finish

KENNESAW, Ga.  (April 3, 2012)  —  Manufacturing activity in Georgia remained flat in March, 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  —  slipped by just 0.3 of a point in March, mostly due to a drop in finished inventory.  The latest reading marks two consecutive PMI readings above 60, indicating that  manufacturing is growing faster than it was during the fourth quarter of 2011. The average PMI for the fourth quarter was 47.7, compared to 58 for the quarter that just closed.

“The improvement in the Georgia PMI is tied to improved U.S. economic conditions and continued export growth,” said Don Sabbarese, professor of economics and director of the Econometric Center at the Coles College of Business. “Domestic economic growth may be somewhat offsetting the anticipated recession for the European Union and slowdown in the global economy.”

No respondents expected production to be lower in the next three to six months than their current production.

Other highlights of the March PMI include:

·         New orders were up 0.2 of a point, to 68.5

·         Production was up 3.3 points, to 66.7

·         Employment was down 0.9 of a point, to  57.4

·         Supplier delivery time was up 0.7 of a point, to 57.4

·         Finished inventory decreased 4.6 points, to 53.7

·         Commodity prices were up 5.4 points, to 70.4

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 up 1 point for March, to 53.4. 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 March PMI, or to speak with professor Sabbarese, please call 770-423-6094.


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