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Georgia’s July 2017 Manufacturing Activity

by: Smith and Howard

August 1, 2017

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Georgia’s Purchasing Managers Index (PMI) — a reading of economic activity in the state’s manufacturing sector — decreased by 3.1 points in July to 56.9. Production had the largest month-over-month decrease, dropping 9.4 points to 62.5. Although an overall decrease, the reading remains at a level consistent with expansion in goods-producing industries. National and Southeast PMIs even out at 56.3 and 51.6, respectively.

The Purchasing Managers Index (PMI) Report is underwritten by the Manufacturing and Distribution Group of Smith & 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 July respondents:

  • “The next 4 months look good for our industry.”
  • “We believe that price increase for materials will continue through this year.”
  • “We are super busy and looks good balance of year.”

Other highlights of the July PMI include:

  • New orders were down 3.1 points, to 59.4
  • Production was down 9.4 points, to 62.5
  • Employment was down 3.1 points, to 59.4
  • Supplier delivery time was up 3.1 points, to 59.4
  • Finished inventory was down 3.1 points, to 43.8
  • Commodity prices were up 3.1 points, to 53.1

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 down 1.5 points in July, to 56.3. 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 & Howard at 404-874-6244 or simply fill out the form below.

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