Manufacturing In Georgia Sees Big Slowdown In May

Donald Sabbarese
Donald Sabbarese

KENNESAW, Ga. (Jun 3, 2016) —  

After three months of strong growth, the Georgia PMI experienced unexpected weakness in new orders, according to the Purchasing Managers Index released on June 1 by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business.

This weakness drove May’s PMI down to 49.4 points, 7.5 points below its six-month average of 56.9. Georgia manufacturing’s new orders and finished inventory accounted for a disproportionate share of May’s weak report. New orders and finished inventory registered readings of 43.8 and 37.5, respectively.

Production across Georgia decreased 3.1 points to 56.3 points, with 37.5 percent of respondents still reporting higher production for May. Employment also saw a decrease of 3.1 points to 58.4; with 25 percent of respondents reporting increased hiring.  

“Production and employment for May are still at desirable levels for growth,” said Don Sabbarese, director emeritus of the Econometric Center and professor of economics at Kennesaw State University.

“However, new orders and finished inventory’s sharp monthly adjustments leaves the May PMI below the 50 benchmark for growth.”

 The National PMI reading of 51.3 is an increase of 0.5 points for April. The National report identified 12 industries expanding versus the same number for April. May’s PMI registered increases for new orders and supplier delivery time.

Summary of highlights from the May PMI:

  • New orders were down 18.8 points to 43.8, which was 15.1 points below its six-month average.
  • Production was down 3.1 points to 56.3, which was 5.5 points below its six-month average.
  • Employment was down 3.1 points to 59.4 points, which was 3.2 points above its six-month average.
  • Supplier delivery was down 6.3 points to 50, which was 1.6 points below its six-month average.
  • Finished inventory was down 18.8 points to 37.5 points, which was 18.7 points below its six-month average.
  • Commodity prices were down 6.3 points to 59.4, which was 14.6 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.