Georgia’s April 2016 Manufacturing Activity

by: Smith and Howard

May 2, 2016

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According to Don Sabbarese, Professor of Economics at Kennesaw State University, “Georgia registers strong growth even as new orders and production slip from their very high levels in March. Employment continues to be strong.”

Georgia’s Purchasing Managers Index (PMI) — a reading of economic activity in the state’s manufacturing sector — decreased 7.3 points during April, but still showed overall growth for the month at 59.4. The most-improved area was Commodity Prices; up 20.4 points in April. The Purchasing Managers Index (PMI) Report is underwritten by the Manufacturing and Distribution Group of Smith and 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 April respondents:

  • “We are very glad to see prices increase from a very low point. We just don’t know how long this will last.”
  • “Backlog is still good. Our delivery is further out than we would like. Skilled workers are hard to find. Industry outlook is strong.”
  • “We are finally seeing prices of our products rising due to shuttered domestic capacity and lower imports due to trade cases.” 

Other highlights of the April PMI include:

  • New orders were down 11.3 points, to 62.5
  • Production was down 16.8 points to 59.4
  • Employment was up 3 points, to 62.5
  • Supplier delivery time was down 3.3 points, to 56.3
  • Finished inventory was down 8 points, to 56.3
  • Commodity prices were up 20.4 points, to 65.6

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 down 1 point in April, to 50.8. 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 here. Contact any member of the manufacturing industry accounting group or the distribution industry accounting group of Smith and Howard at 404-874-6244 or simply fill out the form below.

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