SouthEast Manufacturing Slows For Second Consecutive Month

Donald Sabbarese
Don Sabbarese

KENNESAW, Ga. (Sep 8, 2015) — Southeast manufacturing activity continued to fall in August with lower levels for new orders, production and employment, 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.

August’s Southeast PMI reading of 48.8 is the first sub-fifty reading since December 2014. A reading below 50 indicatives that manufacturing is contracting. Weakness in new orders led to a strong drop of 15.2 points to 49.1 points for production. Employment also adjusted downward with a 7-point decrease to 50. August readings for all five PMI components registered readings below their six-month averages.

According to Don Sabbarese, director emeritus of the Econometric Center and professor of economics at Kennesaw State University, August’s PMI numbers continue the downward trend that started in July.

“The National PMI’s trend is following a similar pattern, although not with as strong a decrease,” said Sabbarese. “The National PMI dropped 1.6 points to 51.1. Similar to the Southeast PMI, new orders and production were the primary source of weakness.”

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 August Southeast PMI include:

  • New orders decreased 7.1 points to 49.1, 4.3 points below its six-month average
  • Production decreased 15.2 points to 49.1, 8.7 points below its six-month average.
  • Employment decreased 6.3 points to 50, 7 points below its six-month average.
  • Supplier delivery time increased 3.6 points to 50.9, 1.6 points below its six-month average.
  • Finished inventory decreased 2.7 points to 44.6 points, 6.4 points below its six-month average.
  • Commodity prices decreased 10.7 points to 34.8, 10.5 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 a full report of the July PMI or to speak with Don Sabbarese, call 470-578-6094.

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