Georgia’s December 2018 Manufacturing Activity

by: Smith and Howard

January 3, 2018

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Georgia’s Purchasing Managers Index (PMI) — a reading of economic activity in the state’s manufacturing sector — decreased by 2.5 points in December to 60. Georgia, Southeastern and National PMIs remain in range consistent with continued expansion in goods-producing industries. However, regional index components are volatile due to seasonal factors and lower response rate.

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 December respondents:

  • “Seasonal slowdown so no surprise it will be slower for the next 2 months.”
  • “We have a good degree of positivity for 2018 for growth but a great deal of concern over rising prices, driver shortages, and tight inventories of Ti02.”
  • “This is our typical slowdown.”

Other highlights of the December PMI include:

  • New orders were down 3.8 points, to 65.
  • Production was down 23.8 points, to 45.
  • Employment was up 1.3 points, to 70.
  • Supplier delivery time was up 5.6 points, to 65.
  • Finished inventory was up 8.1 points, to 55.
  • Commodity prices were down 0.6 points, to 65.

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 December, to 59.7. 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.

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