Factory activity stalls in Georgia, Southeast

ATLANTA --- Factory executives are reporting slower activity in Georgia and across the Southeast, even as their counterparts in the rest of the nation see things picking up.

The Purchasing Managers Index for Georgia and the Southeast, released Monday by the Econometric Center at Kennesaw State University, shows the pace of growth in the state and region in decline. The Georgia index fell in October for the third consecutive month to 50.3, and the regional measure fell for four months straight to 72.7.

The national index rose last month to 56.9. Readings above 50 predict economic expansion.

Don Sabbarese, the director of the Econometric Center, said the factory managers he surveyed report weaker new orders, which are translating into lower production and hiring. At the same time, they're facing rising commodity prices for raw materials.

Georgia and the Southeast had been leading the nation in economic growth, which fueled a robust housing industry. When the housing industry slumped ahead of the rest of the economy, the region took a major blow.

Things looked up for several months, boosting the index. But the index changed downward in late spring, and Sabbarese traces the up-and-down trend to generous tax credits that Congress offered for first-time homebuyers. When the credit offer expired, the index started dropping.

"I think the Georgia economy was so dependent on residential and commercial construction, and that slowdown has continued," he said.

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