Georgia Manufacturing Hits Growth Level For The First Time Since July

Donald Sabbarese
Don Sabbarese

KENNESAW, Ga. (Nov 7, 2015) — Georgia manufacturing’s Purchasing Managers Index recovered 5.9 points following a three-point increase for September. The PMI’s increase of 8.9 points for the last two months more than offset the sharp 8.3 point drop in August, according to the PMI released on Nov. 2 by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business.

While October’s PMI registered above 50 for the first time since July, it is not clear whether this sharp increase for the last two months will continue. Expected higher production in the next three to six months increased to 36 percent up from 21 percent in September. However, other related national and regional manufacturing data suggest manufacturing may remain at a low level of growth for the rest of the year.

Georgia employment slipped 0.6 of a point in October to 52, with 14.3 percent fewer respondents reporting increased hiring offset by 13 percent less respondents reporting lower hiring. Finished inventory and supplier delivery time’s readings of 56 and 52 also contributed to the sharp jump for the October PMI. National inventory remains volatile, which may be reflected in Georgia’s inventory reading, according to Don Sabbarese, director emeritus of the Econometric Center and professor of economics at Kennesaw State University. 

“Georgia manufacturing’s PMI has been fairly volatile with two sub 50 readings in August and September, and October’s reading of 54.8,” said Sabbarese. “The national October PMI slipped 0.1 of a point to 50.1 and has continued to slip over the past four months to register 4.7 points below Georgia’s October reading.”

The National PMI report only had seven of its 18 industries reporting growth in October. 

Summary of highlights from the October PMI are:

  • New orders were up 3.4 points to 56, which was 1.1 points above its six-month average.
  • Production was up 5.4 points to 58, which was 1 point above its six-month average.
  • Employment was down 0.6 points to 52 points, which was 3.1 points below its six-month average.
  • Supplier delivery was up 11.3 points to 56, which was 2.1 points above its six-month average.
  • Finished inventory was up 9.9 points to 52 points, which was 6.3 points above its six-month average.
  • Commodity prices were down 1.5 points to 38, which was 7.1 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.

-The Marietta Daily Journal