Southern factories report gloomy numbers

ATLANTA --- Factory executives in Georgia and throughout the Southeast report weakening conditions as the regional Purchasing Managers Index dropped to its lowest reading since October.


July's 2.9-point decrease to 53.7 is the third monthly decline in a row, according to figures compiled by the Econometric Center at Kennesaw State University in Kennesaw, Ga.

Though a reading of 50 or higher forecasts economic expansion, the index for Georgia barely exceeds that threshold at 50.7.

Florida's index stands at 60, even after sliding. Its reading is above the national index of 50.9 and those in Alabama and Tennessee. It matches Louisiana and Mississippi.

Four of six survey categories dropped on the regional index, and all but one are below their six-month average.

Some of the weakness comes from the lingering impact of the tsunami that struck Japan in March, closing many auto-parts factories.

"There is little doubt the motor vehicle supply-chain problem for Japan has contributed to this drastic slowdown," said Donald Sabbarese, the director of the regional survey. "It remains to be seen if this slowdown has had a broader effect on other segments of manufacturing in the third quarter.

"Motor vehicle sales should rebound, but will its rebound be sufficient to reverse the current weakness in manufacturing?"

Ten of 18 manufacturing sectors reported growth in July. Those shrinking include plastics, apparel, textiles, electrical equipment, appliances, food, machinery and chemicals.

Buyers for the manufacturing plants remained mostly upbeat. One-third expect their production to be higher in the next three to six months, while just 17 percent predict it will be lower.