Georgia manufacturing index down in October

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October PMI decreases following a 1.6 point increase for September  
 
KENNESAW, Ga.  (Nov. 1, 2012)  — After an increase in September to 52, manufacturing activity in Georgia fell slightly in October to 51.7, a decrease of .3 points, accordingto the Purchasing Managers Index (PMI) Report for Georgia, released today by the Econometric Center at Kennesaw State University’s Michael J. Coles College of Business.  
 
According to the report, the decline in October is consistent with the level of activity since July, which averaged 51.5 points over the past four months, including a high reading of 52 and a low of 50.4.  Thispattern demonstrates that Georgia’s manufacturing sector remains flat.
 
“October’s PMI decrease fits a four month pattern for slower manufacturing growth dating back to July. The eight point drop in new orders and no employment increase were a sign that Georgia’s manufacturing growth is much weaker than the first six months of 2012,” said Don Sabbarese, director of the Econometric Center and professor of economics.
 
Highlights of the October PMI include:
  • New orders were down 8 points
  • Production up 4.3 points, to 54.3
  • Employment did not change, remains at 50
  • Supplier delivery was down 3.8 points, to 52.2
  • Finished inventory  was up 6.2 points, to 52.2
  • Commodity prices were up 2.0   points, to 50
 
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 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 October  PMI, or to speak with professor Sabbarese, please call 770-423-6094. 
 
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