Manufacturing showing signs of new life

By Michael E. Kanell

The Atlanta Journal-Constitution

Georgia manufacturing has veered encouragingly toward daylight, as a rising number of companies report increases in new orders and production.

The sector is still in losing territory, but a report on June sales showed hopeful turns in the components that tend to lead overall growth, according to a monthly survey of companies by Kennesaw State University.

Hiring was down, but not as much as in previous months.

Moreover, “employment remains ... very low relative to the level of new orders and production,” said Don Sabbarese, director of the Kennesaw State Econometrics Center. That means if demand for Georgia manufacturing continues to increase, hiring will have to catch up.

Right now, the index shows employment in manufacturing still shrinking, but the decline has slowed. In contrast, some of the other components actually climbed onto growth turf for the month.

The index for new orders was 54.5, with 50 marking the dividing line between contraction or expansion. The latest number is more than double the record low of 26.8 set last December. Production in June jumped 16 points from the previous month to hit 61.4.

Manufacturing in the United States is using just 64.7 percent of its capacity, its lowest level since World War II, Sabbarese said. Typically, when recoveries begin and demand improves, manufacturing must beef up production toward normal levels -- generally well above 70 percent -- and thousands of workers return to work. But the economy has been moving from manufacturing to services and Georgia has been part of the national shift.

Still, even a modest rebound would be welcome these days: the jobless rate in Georgia last month reached a record 10.1 percent. In metro Atlanta, it was 10.7 percent. In past recessions, manufacturing’s recovery often was a harbinger of better times.

But manufacturing employment in Georgia has had a horrid decade, shedding jobs since before the previous recession in 2001.

Still, because manufacturing jobs tend to be better-than-average paying and often ripple through the local economy through other purchases -- such as for supplies -- the sector is often seen as having an outsized economic effect. Despite the hemorrhaging of jobs, manufacturing still accounts for nearly 10 percent of the Georgia workforce.