Georgia international businesses experienced a slight drop in second-quarter activity due to decreases in both employment and capital spending, which offset increases in new orders and production, according to the Georgia International Business Index (GIBI) released today by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business.

According to the report, the 2.3-point drop in the second-quarter GIBI – from 57.8 down to 55.5 – follows a significant first-quarter climb for Georgia’s international businesses.

“Higher new orders and production bring into question why employment and capital spending are simultaneously decreasing,” said Don Sabbarese, director of the Econometric Center at Kennesaw State. “Employment and capital spending decisions can sometimes be weighted more on longer term expectations rather than current market conditions.”

The Georgia International Business Index is a quarterly survey of foreign-funded manufacturers operating in Georgia. It is a composite of four components: new orders, production, employment and capital spending.

According to Sabbarese, the GIBI’s second-quarter weakness is consistent with patterns in the national, Georgia and Southeastern purchasing manufacturers index monthly reports.

Highlights from the 2^nd Quarter GIBI include:

• New orders up 18.8 points, to 62.5
• Production up 6.3 points, to 56.3
• Employment down 15.6 points, to 53.1
• Capital spending down 18.8 points, to 50
• Exports (as a percent of total sales) is down 0.1 points, to 11.8 
• Imports (as a percent of total sales) is down 2.0 points, to 35.8

A GIBI reading above 50 indicates that manufacturing activity is expanding; a reading below 50 indicates it is contracting.

The GIBI, compiled from a quarterly survey of manufacturers, is the only indicator of market conditions for foreign-funded manufacturers. Manufacturing, which accounts for 9 percent of total employment, is sensitive to changes in the economy and trends in manufacturing, and reveals differences between domestic and foreign-funded manufacturers. 

The GIBI’s value is in its timeliness and sensitivity to variables such as interest rates, global markets and other economic changes. The GIBI provides valuable data used by businesses and government agencies to assist in its analysis of current economic conditions, along with many other data sources, to get a picture of economic activity.