Manufacturing Rebounds After 3-Month Slide

Donald Sabbarese
Don Sabbarese

KENNESAW, Ga. (Aug 10, 2015) —  

Georgia manufacturing recovered from a three-month slump with a 6.5 point increase to 61.3, which is 2.3 points above its six-month average, according to the Purchasing Managers Index released on July 1 by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business.

Georgia manufacturer’s new orders and production were driven up by 50 percent of respondents reporting higher numbers for June. New orders and production each finished at 72.9, and although the readings are well above average, the levels appear to be consistent with a pickup in economic activity, according to Don Sabbarese, director emeritus of the Econometric Center and professor of economics at Kennesaw State University.

“The May analysis of new orders and production’s sharp decreases were interpreted as an unusual aberration from their six-month trend, which appears to be the case given June’s rebound,” Sabbarese said.

The national PMI increased 0.7 of a point to 53.5, but remains 7.8 points below the Georgia PMI of 61.3.

Forty-two percent of June respondents anticipate higher production in the next three to six months, one percent down from 43 percent in May. While new orders, production and commodity prices all saw increases, employment saw a drop of 5.7 points.

Summary of highlights from the June PMI are:

          ♦ New orders up 25.3 points to 72.9, which is 11.8 points above its six-month average.

          ♦ Production up 20.5 points to 72.9, which is seven points above its six-month average.

          ♦ Employment down 5.7 points to 56.3 points, which is 4.1 points below its six-month average.

          ♦ Supplier delivery down six points to 58.3, which is 0.7 of a point above its six-month average.

          ♦ Finished inventory down 1.8 points to 45.8 points, which is 3.6 points below its six-month average.

          ♦ Commodity prices up 10.7 points to 58.3, which is 13.5 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.

-Marietta Daily Journal