SouthEast Manufacturing Ends Three-Month Climb To Finish The Down Side

Donald Sabbarese
Don Sabbarese

KENNESAW, Ga. (Jan 6, 2016) — Southeast manufacturing activity fell 2.6 points following three months of gradual increases, 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.

December’s PMI fell to 52 from 54.6 in November, reversing the 5.8 points gain from the previous three months. New orders and production fell to 50, with decreases of 4 and 2 points. Supplier delivery time and finished inventory also experienced weakness with lower readings of 7 and 1 point.

According to Don Sabbarese, director emeritus of the Econometric Center and professor of economics at Kennesaw State University, December did reveal two positive signs. 50 percent of respondents reported expectations for higher production in the next three to six months, up from 40 percent for November, and employment increased by 1 point to 57 points.

The National PMI also ended 2016 on the decline, and remained at a lower level than manufacturing in the Southeast.

“The National PMI fell by 0.4 points to 48.2,” said Sabbarese. “National new orders, production and finished inventory increases were more than offset by decreases for employment and supplier delivery time.”

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 December Southeast PMI include:

  • New orders decreased 4.0 points to 50, 3 points below its six-month average
  • Production decreased 2.0 points to 50, 4.5 points below its six-month average
  • Employment increased 1.0 points to 57, 2.0 points above its six-month average
  • Supplier delivery time decreased 7.0 points to 50, 1.3 points below its six-month average
  • Finished inventory decreased 1.0 points to 53 points, 3.9 points below its six-month average
  • Commodity prices decreased 3.0 points to 34, 3.9 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.

For more information on the Southeast PMI or to talk with Sabbarese, call 470-578-6094.