Georgia Manufacturing On Unexpected Rebound

Don Sabbarese
Don Sabbarese

KENNESAW, Ga. (Apr 4, 2016) — Georgia manufacturing saw a strong upsurge for the month of February due to increases in production and new orders. While the level of increase was unexpected, the direction of improvement was not, according to the Purchasing Managers Index released on March 1 by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business.

February’s PMI of 61.6 is a 9.6 point jump from January’s reading of 52, with most of the improvement driven by new orders and production. New orders increased 16.4 points to 68.4 and production increased 26.3 points to 76.3 points. Employment improved 4.6 points to 52.6 and supplier delivery time increased 3.4 points to 47.4.

Although new orders and production tend to be the most volatile from month to month, these increases were unexpected and unsustainable, according to Don Sabbarese, director emeritus of the Econometric Center and professor of economics at KSU.

“That said, it does suggest Georgia manufacturing is moving in the right direction,” Sabbarese said.

The National PMI reading of 49.5 is an increase of 1.3 points for February. The National report identified only nine of 18 industries expanding in February. 

Summary of highlights from the February PMI:

  • New orders were up 16.4 points to 68.4, which was 13.2 points above its six-month average.
  • Production was up 26.3 points to 76.3, which was 19.4 points above its six-month average.
  • Employment was up 4.6 points to 52.6 points, which was 0.2 points below its six-month average.
  • Supplier delivery was up 3.4 points to 47.4, which was 3.2 points below its six-month average.
  • Finished inventory was down 2.8 points to 63.2 points, which was 8.1 points above its six-month average.
  • Commodity prices were up 2.2 points to 34.2, which was 1.2 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.