An Economic Update on Georgia’s Manufacturing Activity

With the second quarter of 2019 behind us, the national and southeastern Purchasing Manager Index (PMI) reports a modest slip according to Kennesaw State University’s Coles College of Business’ Economic Center’s June 2019 PMI Report. The report goes on the indicate Georgia’s PMI – a reading of economic activity in the state’s manufacturing sector – shows a steady increase throughout 2019. In the June 2019 report, Georgia’s PMI advances on new orders, contrary to the nation and even the southeast. There are many conditions that affect Georgia manufacturers – both positive and negative – but the overall outlook for the industry remains stable.

Highlights for the average of the first six months of 2019 compared to the average of the first six months of 2018:

• News orders were down 13.73 points
• Production was down 14.39 points
• Employment was down 8.93 points
• Supply Delivery Time was down 6.12
• Finished Inventory was down 1.57
• Commodity prices were down 26.17 points

The Georgia PMI reading is a composite of five variables — new orders, production, employment, supply deliveries and finished inventory. A sixth variable, commodity prices, is compiled by the Coles College’s Econometric Center but does not go into the PMI calculation.

The PMI, compiled from a monthly survey of manufacturers, is the earliest indicator of market conditions in the sector. Since manufacturing, which accounts for 11 percent of GDP, is sensitive to changes in the economy, it can also reveal changing macroeconomic trends.

The PMI’s value is in its timeliness and sensitivity to variables such as interest rates, global markets and other economic changes. The Georgia PMI provides valuable data used by institutions such as the Federal Reserve Bank of Atlanta to assist in their analysis of current economic conditions, along with many other data sources, to get a picture of economic activity.

Read the June 2019 report by clicking the PDF link at the top of this article. Contact any member of the Manufacturing/Distribution group of Smith and Howard at 404-874-6244.