Georgia’s June Manufacturing Activity

by: Smith and Howard

July 1, 2016

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Georgia’s Purchasing Managers Index (PMI) — a reading of economic activity in the state’s manufacturing sector — decreased 0.1 points during June to 49.3, its lowest level of the year despite growth in various areas. Areas with the largest decrease include employment; down 12.7 points, and production; down 9.6 points. 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 June respondents:

  • “We are in a slow period, but future looks good.”
  • “I don’t think there will be much change in the economy until some of the uncertainty settles.”
  • Activity in the dump truck manufacturing is still strong. Backlogs are too far out and we are losing business. We are expanding capacity every month. Next 5 months look good.”

Other highlights of the June PMI include:

  • New orders were up 2.9 points, to 46.7
  • Production was down 9.6 points, to 46.7
  • Employment was down 12.7 points, to 46.7
  • Supplier delivery time was up 13.3 points, to 63.3
  • Finished inventory was up 5.8 points, to 43.3
  • Commodity prices were up 4.0 points, to 63.3

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 1.9 points in June, to 53.2. 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 report by clicking here. Contact any member of the manufacturing/distribution industry group of Smith and Howard at 404-874-6244 or simply fill out the form below.

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