Georgia’s August 2017 Manufacturing Activity

by: Smith and Howard

September 5, 2017

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Georgia’s Purchasing Managers Index (PMI) — a reading of economic activity in the state’s manufacturing sector — increased by 1.7 points in August to 58.6. Finished inventory had the largest month-over-month increase, rising 24.1 points to 67.9. All index components remain at levels consistent with expansion in the manufacturing sector.

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 August respondents:

  • “Industry outlook remains positive and our back log is healthy.”
  • “We are still more than 25% over the previous year; even though orders in July were lower than in June, they were still 25% over last year.”
  • “We are busier than ever before.”

Other highlights of the August PMI include:

  • New orders were down 2.2 points, to 57.1
  • Production was up 1.8 points, to 64.3
  • Employment was down 5.8 points, to 53.6
  • Supplier delivery time was down 9.4 points, to 50.0
  • Finished inventory was up 24.1 points, to 67.9
  • Commodity prices were up 4.0 points, to 57.1

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 2.5 points in August, to 58.8. 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 group or the distribution industry group of Smith and Howard at 404-874-6244 or simply fill out the form below.

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