Georgia’s February 2018 Manufacturing Activity

by: Smith and Howard

March 1, 2018

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Georgia’s Purchasing Managers Index (PMI) — a reading of economic activity in the state’s manufacturing sector — increased by 8.5 points in February to 67.7. The increase is driven by a surge in new orders and production. National and Southeast PMIs also rise.

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 February respondents:

  • “All is good moving into the busier time of the season for us.”
  • “Economic conditions are the best I can remember with nearly all end markets strong.”
  • “Skilled labor shortage still a concern.”

Other highlights of the February PMI include:

  • New orders were up 18.3 points, to 80.8.
  • Production was up 23.1 points, to 73.1.
  • Employment was down 1.9 points, to 73.1.
  • Supplier delivery time was down 1 point, to 61.5.
  • Finished inventory was up 4.2 points, to 50.
  • Commodity prices were down 9.6 points, to 65.4.

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 up 1.7 points in February, to 60.8. 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.

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