SouthEast Manufacturing Begins 2016 On An Upswing

Donald Sabbarese
Donald Sabbarese

KENNESAW, Ga. (Feb 5, 2016) — Southeast manufacturing activity increased 3.3 points to 55.3, propelled by strong growth in new orders and production, according to the Southeast’s Purchasing Managers Index (PMI) report released today by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business.

January’s PMI increase to 55.3 marks the Southeast’s highest reading going back to April 2015. The combination of increased new orders, production and finished inventory paints a positive picture for Southeast manufacturing growth going in to 2016. However, lower levels for employment and supplier delivery time could suggest this level of growth may not continue into the future.  Employment saw a five point decrease and supplier delivery time saw a two point decrease.

According to Don Sabbarese, director emeritus of the Econometric Center and professor of economics at Kennesaw State University, 37 percent of January respondents reported expectations for higher production in the next three to six months, down from 50 percent in December.

“The National PMI increased 0.2 of a point to 48.2,” said Sabbarese. “National new orders and production increased 2.7 and 0.3 points, respectively. The Southeast continues to operate at a much higher growth rate than the national which is currently contracting.”

Six Southeastern states — Alabama, Florida, Georgia, Louisiana, Mississippi and Tennessee — are included in the Econometric Center’s monthly regional report. Four of the six experienced higher PMI readings.

Highlights of the January Southeast PMI include: 

  • New orders increased 8.8 points to 58.8, 5.4 points above its six-month average
  • Production increased 7.8 points to 57.8, 4.4 points above its six-month average
  • Employment decreased 5.0 points to 52, 2.4 points below its six-month average
  • Supplier delivery time decreased 2.0 points to 48, 3.4 points below its six-month average
  • Finished inventory increased 6.8 points to 59.8 points, 8.6 points above its six-month average
  • Commodity prices increased 2.3 points to 36.3 points 0.1 points below its six-month average

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The Southeast PMI reading is a composite of five variables — new orders, production, employment, supply deliveries and finished inventory. A sixth variable, commodity prices, is compiled by the Coles College’s Econometric Center but does not go into the PMI calculation.

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For more information on the Southeast PMI or to talk with Sabbarese, call 470-578-3481. 

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