Foreign manufacturers produced more and spent more in Georgia during the second quarter of 2011 even as new orders slowed compared to the previous quarter, a Kennesaw State University index showed.
The Georgia International Business Index, published by the Econometric Center at the Coles College of Business, tracked an overall gain of two points from 69 to 71. The index is calculated using responses from purchasing managers at foreign-owned manufacturers across the state.
A GIBI reading above 50 indicates that manufacturing activity is expanding, while a reading below 50 marks a decline.
For the second quarter, production was up 5.2 points to 73.7 while capital spending was up 5.2 points to 68.4. New orders were down 2.6 points to 65.8.
Don Sabbarese, professor of economics and director of the Econometric center, said it was hard to tell why spending and production were growing more rapidly while growth in orders slowed.
“It could be that production lags new orders. There’s a possibility that we may see production slip the next time we do it,” Dr. Sabbarese said.
If the monthly Georgia Purchasing Managers Index is any indication, firms might’ve been foreseeing a gloomy July. The Georgia PMI, which tracks the manufacturing activity of domestic firms in the state, saw growth slow sharply during July before ticking back up in August.
It’s hard to compare the two, but the GIBI does show that manufacturing by foreign-owned firms remained strong in Georgia, despite a “soft spot” in global manufacturing and the U.S. economy, Dr. Sabbarese said.
He cited “really nice solid numbers,” tallying an increase in new orders for 42 percent of respondents and expanded production for 47 percent. The GIBI asks companies whether each category increased, decreased or remained the same from quarter to quarter.
Although it’s hard to pinpoint why local manufacturing is expanding amid a slow U.S. economy, Dr. Sabbarese speculated that some foreign companies are exporting made-in-Georgia products back to fast-growing markets like Brazil, India and China.
International manufacturing employment growth remained strong from quarter to quarter, with a GIBI index reading of 76.3 points during both periods.
Georgia’s unemployment rate increased in August to 10.2 percent from 10.1 percent in July. Manufacturing accounts for about 9 percent of jobs in the state, Dr. Sabbarese said.
The Econometric Center began compiling data on foreign-owned manufacturers at the beginning of the year to observe a vital and growing sector of the state’s economy, he said.
For a copy of the full report, contact Dr. Sabbarese at (770) 423-6094 or by email at dsabbare@kennesaw.edu.
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