Georgia Manufacturing Remains Flat In August

Donald Sabbarese
Don Sabbarese

KENNESAW, Ga. (Sep 2, 2016)New orders and production rise to offset decreases in employment, delivery time and inventory

Georgia manufacturing failed to build on the previous month’s rebound and remained flat in August, according to the Purchasing Managers Index (PMI) released today by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business.

Georgia’s PMI decreased slightly to 52.4 in August, after gaining by 3.2 points to 52.5 in July. The state’s index remained above 50, the benchmark for manufacturing growth, for the second straight month.

Two categories had strong increases in August – new orders by 9 points to 55.9 and production by 8.6 points to 61.8. However, employment decreased by 12.7 points, and finished inventory fell by 5.5 points.

Respondents reported higher new orders and production by 29 and 24 percent, respectively, while only 11.8 percent reported increased hiring.

“Rising new orders and production accompanied by lower employment is unusual, leaving the trend for the next months less apparent,” said Don Sabbarese, Director Emeritus of the Econometric Center and professor of economics at Kennesaw State University.

The national PMI reading of 49.4 decreased by 3.2 points in August, with declines of 7.8 points in new orders and 5.8 points in production accounting for most of the decrease. The national report identified six industries out of 18 expanding in August.

Summary of highlights from the August PMI:

  • New orders up 9 points to 55.9, 1 point above its six-month average
  • Production up 8.6 points to 61.8, 2.9 points above its six-month average
  • Employment down 12.7 points to 52.9, 4.8 points below its six-month average
  • Supplier delivery time down 0.2 points to 52.9, 2.9 points below its six-month average
  • Finished inventory down 5.5 points to 38.2, 9 points below its six-month average
  • Commodity prices down 21.9 points to 50, 9.2 points below its six-month average

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

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For a full report of the August PMI or to speak with Don Sabbarese, call 470-578-3481.