State Manufacturing Ends 2015 In Decline

Donald Sabbarese
Don Sabbarese

KENNESAW, Ga. (Jan 6, 2016) — Georgia manufacturing retreated in December following three months of gradual growth, according to the Purchasing Managers Index released on Jan. 4 by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business. 

December’s PMI of 52.5 is a 2.5 drop from November’s reading of 55. Supplier delivery time and finished inventory were the major contributors, with decreases of 6.6 and 6.8 points. Employment also saw a decrease of 1.8 point to 55. Both new orders and production saw growth of 2.5 and .2 points. 

“Although Georgia and the National PMIs both declined in December, Georgia’s underlying components and PMI continue to register well above the National reading of 48.2,” said Don Sabbarese, director emeritus of the Econometric Center and professor of economics at KSU. “A reading below 50 is a range of contraction, which continues to demonstrate that the industrial and manufacturing sectors of the U.S. economy currently remain weak.” 

According to Sabbarese, one positive indicator in this month’s report is the number of respondents expecting higher production in the next three to six months. That number increased to 45-percent, up from November’s reading of 32-percent. 

The National PMI reading of 48.2 fell 0.4 of a point and remains 4.3 points below Georgia’s PMI of 52.5 points. The National report identified only six of 18 industries expanding in December.  

Summary of highlights from the December PMI:

  • New orders were up 2.5 points to 52.5, which was 0.6 points above its six-month average.
  • Production was up 0.2 points to 52.5, which was 1.1 points below its six-month average.
  • Employment was down 1.8 points to 55 points, which was 1.0 points above its six-month average.
  • Supplier delivery was down 6.6 points to 52.5, which was 0.5 points above its six-month average.
  • Finished inventory was down 6.8 points to 50 points, which was 2.0 points above its six-month average.
  • Commodity prices were down 3.9 points to 32.5, which was 6.4 points below its six-month average.

The Georgia PMI provides a snapshot of manufacturing activity in the state, just as the monthly PMI released by the Institute for Supply Management provides a picture of national manufacturing activity. A PMI reading above 50 indicates that manufacturing activity is expanding; a reading below 50 indicates it is contracting.

The Marietta Daily Journal