Georgia’s international businesses experience growth for first time in nearly a year

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A jump in employment and capital spending offsets drop in new orders and production

KENNESAW, Ga.  (April 22, 2013) — Georgia international businesses experienced a jump in first-quarter activity due to higher employment and capital spending, which offset lower levels of new orders and production, according to the Georgia International Business Index (GIBI) released today by Kennesaw State University’s Economic Center in the Michael J. Coles College of Business.

According to the report, the 8.9-point jump in the first quarter was the first increase since early 2012. In the first quarter, the GIBI was 57.8, up from 49 in the fourth quarter 2012, indicating that manufacturing activity is expanding in the state.

“It’s interesting that the increase is tied to capital spending and employment since it’s highly unusual for employment to increase as new orders and production decrease,” said Don Sabbarese, director of the Econometric Center and professor of economics at Kennesaw State.  “Higher capital spending may indicate respondents expect business will improve in the next six months.”

Capital spending recorded an increase of more than 31 points, while employment rose nearly 15 points for first quarter. 

The Georgia International Business Index is a survey of foreign-funded manufacturers operating in Georgia. It is a composite of four components: new orders, production, employment and capital spending.

Highlights from the 1st Quarter GIBI include:

·         Employment up 14.6 points, to 68.8

·         Capital spending up 31.2 points, to 68.8

·         New orders down 6.3 points, to 43.8

·         Production down 4.2 points, to 50

·         Exports as a percent of total sales is up 1.4 points, to 11.9

·         Imports as a percent of total sales is down 1.0 points, to 37.8

The Georgia International Business Index, compiled by the Econometric Center at Kennesaw State, provides a quarterly snapshot of manufacturing activity for foreign-funded businesses in the state, just as the monthly Georgia PMI released by the Econometric Center is a snapshot of state manufacturing activity. A GIBI reading above 50 indicates that manufacturing activity is expanding; a reading below 50 indicates it is contracting.

The GIBI, compiled from a quarterly survey of manufacturers, is the only indicator of market conditions for foreign-funded manufacturers. Manufacturing, which accounts for 9 percent of total employment, is sensitive to changes in the economy, trends in manufacturing, and reveals differences between domestic and foreign-funded manufacturers. 

The GIBI’s value is in its timeliness and sensitivity to variables such as interest rates, global markets and other economic changes. The GIBI provides valuable data used by businesses and government agencies to assist in its analysis of current economic conditions, along with many other data sources, to get a picture of economic activity. 

For the full report of the quarterly GIBI, contact Don Sabbarese at 770-423-6094. 

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Kennesaw State University is the third-largest university in Georgia, offering 80 graduate and undergraduate degrees, including doctorates in education, business and nursing, and a new Ph.D. in international conflict management. A member of the University System of Georgia, Kennesaw State is a comprehensive, residential institution with a growing population of 24,600 students from more than 130 countries.