Georgia manufacturing takes another turn for the worse

When manufacturing activity in Georgia increased in August after declining for four consecutive months, the question arose: Was it a sign of a coming economic turnaround, or a mere blip amid bad news?

September's Purchasing Managers Index report, released Monday by Kennesaw State University, suggests it was the latter.

The index, a barometer of the state's manufacturing health, plummeted last month in all categories measured, including new orders, production, employment and finished inventories. Supply deliveries and commodity prices also declined.

The index dropped to 48.7, the first time it has been below 50 since January 2010. Anything under 50 is an indication that manufacturing is contracting, not expanding. It stood at 58.1 in August, after an unexpected jump from July's mark of 50.7. It had peaked at 67.6 in March, then began falling.

"The brief improvement for August may have been an aberration instead of a trend change," said Don Sabbarese, director of the Econometric Center at Kennesaw State's Coles College of Business. "All the underlying variables are down. The volatility for the last three months and the direction of change does not bode well for Georgia manufacturing. The economic slowdown for the domestic and global economy is obviously affecting the Georgia manufacturing sector."

Sabbarese said that, "A month-to-month shift back and forth of this size indicates [survey] participants continue to second guess their earlier positive expectations from [the] first and second quarters of 2011."

Georgia also did not fare well when compared to the nation as a whole, or the region. The U.S. index improved slightly last month, and stood at 51.6 percent, while the Southeast declined, but not as severely, to 49.4.