KENNESAW - According to a monthly survey, manufacturing activity in Georgia increased by 3 points on the Georgia Purchasing Managers Index to 47.3 points for the month of July. That increase comes after two months of decline.

The increase was because of a rise in new orders and production, according to the Econometric Center at Kennesaw State University's Coles College of Business, which compiles the state PMI and has released the PMI report since 1990. The monthly report is an economic indicator drawn from a survey of manufacturers in Georgia. Economists use the PMI to track manufacturing activity.

A PMI reading above 50 indicates that manufacturing activity is expanding; a reading below 50 indicates it is contracting. Georgia's PMI is comprised of five variables: new orders, production, employment, supply deliveries and finished inventory.

At under 50, the reading shows that manufacturing continues to contract, but at a slower rate than in the first quarter of 2009. Manufacturers are still cautious about hiring, despite new orders increasing by 9.3 points.

"Companies continue to respond to changes in new orders month by month," said Dr. Don Sabbarese, economics professor and director of the Econometric Center at the Coles College of Business. "In July, manufacturers increased production, but with only a very minimal increase in new hires. In fact, some participants are still cutting back on their labor force."

Highlights of the July PMI include: Employment was up 0.9 of a point to 31.8; new orders jumped 9.3 points to 54.5, its highest reading since July 2008; production was up 16.1 to 61.4, its highest reading for the year; and commodity prices decreased for the first time since March.

At 31.8, employment remains very low and much lower than the national average, Sabbarese said.