Georgia’s January 2016 Manufacturing Activity

by: Smith and Howard

February 1, 2016

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January 2016 – Georgia’s Purchasing Managers Index (PMI) — a reading of economic activity in the state’s manufacturing sector — decreased 0.5 points during January. The most-improved area was Finished Inventory; up 16 points in January. 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 January respondents:

  • “Our industry activity remains strong and should be good well into the second quarter.”
  • “A strong dollar affects our ability to export finished goods competitively.”
  • “Despite the lemmings in the stock market, business is very good and looks good going forward.”

Other highlights of the January PMI include:

  • New orders were down 0.5 points, to 52.0
  • Production was down 2.5 points, to 50.0
  • Employment was down 7.0 points, to 48.0
  • Supplier delivery time was down 8.5 points, to 44.0
  • Finished inventory was up 16.0 points, to 66.0
  • Commodity prices were down 0.5 points, to 32.0

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 0.2 points in January, to 48.2. 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 article here. Contact any member of the manufacturing industry accounting group or the distribution industry accounting group of Smith and Howard at 404-874-6244.

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