April 2014 PMI Report Shows Slight Increase

by: Smith and Howard

May 1, 2014

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The Purchasing Managers Index (PMI) Report is underwritten by the Manufacturing and Distribution Group of Smith and Howard, an Atlanta accounting and advisory firm, and is produced monthly by the Econometric Center at Kennesaw State University.
Georgia’s Purchasing Managers Index (PMI) — a reading of economic activity in the state’s manufacturing sector — rose by 0.2 of a point from 62.5 to 62.7 in April.  

Some general remarks from the April respondents:

“Activity in our industry is good.”
“Transportation delays hurt 1st quarter shipments by about 5%.”
“Sales were down 15% in Q1 but a strong April has us wondering if we will get the 15% back.”

Other highlights of the April PMI include:  

  • New orders were up 8.9 points, to 75.0 
  • Production was down 1.9 points, to 65.9
  • Employment was down 0.6 of a point, to 63.6
  • Supplier delivery time was up 4.2 points, to 61.4
  • Finished inventory was down 9.4 points, to 47.7
  • Commodity prices were up 8.3 points, to 63.6

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. The national PMI was up 1.2 points in April, to 54.9. A PMI reading above 50 indicates that manufacturing activity is expanding; a reading below 50 indicates it is contracting.
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.

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