Manufacturing index increases, KSU professor says

The Marietta Daily Journal

Manufacturing activity in Georgia increased by 4.3 points in October on the Georgia Purchasing Managers Index after two consecutive months of decline, according to a monthly survey.

A big boost in new orders and production led to an index of 48.9 points, according to the Econometric Center at Kennesaw State University's Coles College of Business, which compiles the state PMI. The monthly report is an economic indicator drawn from a survey of manufacturers in Georgia.

"The boom in orders and its positive impact on production suggests that Georgia manufacturers are beginning to show some signs of growth," said Don Sabbarese, economics professor and director of the Econometric Center.

"If new orders continue to go up over the next few months, we may see further growth in production, which would be great news."

Economists use the PMI to track manufacturing activity. A PMI reading above 50 indicates that manufacturing activity is expanding; a reading below 50 indicates it is contracting. Georgia's PMI is composed of five variables: new orders, production, employment, supply deliveries and finished inventory.

The latest numbers indicate that more manufacturers, while as a group are still contracting as a group, have experienced positive growth, Sabbarese said. He said gains in the index were driven by an increase of 18.8 points in new orders, up to 55.4, and a 9.8 point increase in production, to 48.2.

"About a third of respondents reported higher new orders and production, which contributed to the higher PMI reading. Should it continue over a longer period of time it would suggest that these respondents are experiencing a sustainable increase in their business. It's too early to draw that conclusion, but it's a good sign."