Georgia Manufacturing Remains Strong In April

Donald Sabbarese
Donald Sabbarese

KENNESAW, Ga. (May 7, 2016) —  

Georgia manufacturing’s new orders and production adjusted in April, after reaching unusually high levels, according to the Purchasing Managers Index released on May 2 by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business.

April’s PMI of 59.4 registered 1.5 points higher than its six-month average of 57.9. New orders and production registered readings of 62.5 and 59.4 respectively.

Employment increased three points to 62.5; with 31-percent of respondents reporting increased hiring. Employment’s apparent strength bodes well for manufacturing, as it remains strong regardless of new orders and production’s volatility. Commodity prices jumped 20.4 points to 65.6, 24.6 points above their six-month averages. The recent rise in crude oil prices may be somewhat responsible for this unusual jump.

The strong drop off of new orders and production at first glance might be a concern, but April levels remain strong and employment’s upward trend suggests that respondents are fairly confident that current conditions are sustainable. In addition, 44-percent of respondents expect production to be higher in the next three to six months, according to Don Sabbarese, director emeritus of the Econometric Center and professor of economics at KSU.

The National PMI reading of 50.8 is a decrease of one-point for April. The National report identified 11 industries expanding versus 12 of 18 industries in March.  

 Summary of highlights from the April PMI:

  • New orders were down 11.3 points to 62.5, which was 2.5 points above its six-month average.
  • Production was down 16.8 points to 59.4, which was 1.7 points below its six-month average.
  • Employment was up three points to 62.5 points, which was 6.8 points above its six-month average.
  • Supplier delivery was down 3.3 points to 56.3, which was 3.1 points above its six-month average.
  • Finished inventory was down eight points to 56.3 points, which was eight points below its six-month average.
  • Commodity prices was up 20.4 points to 65.6, which was 24.6 points above 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.