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Georgia Manufacturing News – November 2015

by: Smith and Howard

December 1, 2015

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According to Don Sabbarese, Professor of Economics at Kennesaw State University,” The November PMI reading of 55 suggests Georgia manufacturing is growing even though its new orders and production components dropped. Employment’s improvement was a positive sign for the longer run. Given these mixed signals the near future is less clear.”

November 2015 – Georgia’s Purchasing Managers Index (PMI) — a reading of economic activity in the state’s manufacturing sector — increased 0.2 points during November. The most-improved areas were Supply Deliveries and Finished Inventory; up 11.3 and 9.9 percent respectively in October. The Purchasing Managers Index (PMI) Report is underwritten by the Manufacturing and Distribution Group of Smith & Howard, a top Atlanta CPA firm with a focus on serving manufacturing businesses, and is produced monthly by the Econometric Center at Kennesaw State University.

Some general remarks from the November respondents:

  • “With oil continuing to bottom out, prices continue to go lower.”
  • “Price of overseas material is flux. Container costs remain high even with lower fuel costs.”
  • “Our industry is stable. With a long-term Highway Authorization Bill, confidence will improve tremendously.”

Other highlights of the November PMI include:

  • New orders were down 6.0 points, to 50.0
  • Production was down 5.7 points, to 52.3
  • Employment was up 4.8 points, to 56.8
  • Supplier delivery time was up 3.1 points, to 59.1
  • Finished inventory was up 4.8 points, to 56.8
  • Commodity prices were down 1.6 points, to 36.4

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 down 1.5 points in November, to 58.6. 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.

Read the entire report by clicking the PDF link at the top of this article. Contact any member of the manufacturing industry accounting group or the distribution industry accounting group of Smith & Howard at 404-874-6244.

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