Georgia’s April manufacturing index down; adjusts from March gains

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Index now in line with longer term trends

KENNESAW, Ga.  (May 1, 2013) — Georgia manufacturing activity has decreased 7 points in April following an unusual March jump in new orders. This adjustment is more in line with the longer term trend, according to the Purchasing Managers Index (PMI) report released today by Kennesaw State University’s Econometric Center at the Michael J. Coles College of Business.

As Georgia’s new orders adjusted in April down 12.5 points from March so did its underlying components of production, employment and supplier delivery. 

“April’s strong decrease in new orders and the decrease in remaining components suggest that March’s increase in new orders and decrease in production was a one-month anomaly rather than an inflection point to a higher trend,” said Don Sabbarese, director of the Econometric Center and professor of economics at Kennesaw State.

Georgia’s April PMI of 54.8 is 1.7 points higher than its six-month average of 53.1.

“Georgia’s April commodity price decreased 17.1 points to 42, consistent with boarder commodity price decreases,” said Sabbarese. “Georgia’s finished inventory reading of 58 remains 11.5 points higher than the national finished inventory reading of 46.5.”

Highlights from the April PMI include:

·         New orders down 12.5 points, to 58, 3.6 points above its six-month average

·         Production down 3.1points, to 56, 4.4 points above its six-month average

·         Employment down 5.1 points, to 54, 1.9 points above its six-month average

·         Supplier delivery down 6.5 points, to 48, 4.5 points below its six-month average

·         Finished inventory down 7.9 points, to 58, 3.3 points above its six-month average

·         Commodity prices down 17.1 points, to 42, 16.1 points below its six-month average

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 its 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 Sabbarese, please call 770-423-6094. 

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Contact: Tiffany Capuano, 678-797-2549 or tcapuano@kennesaw.edu