Georgia’s May 2017 Manufacturing Recent Activity

by: Smith and Howard

June 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 8.3 points in May to 63.8. Even with the decrease, the reading is still significantly above 50 – the benchmark for expansion. New orders and production reverted to more moderate paces, while employment remained consistent with additional job creation.

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 May respondents:

  • “Industry fundamentals are still good.”
  • “Still strong but softening a bit over the next few months.”
  • “We are seeing steady price increases each month.”

Other highlights of the May PMI include:

  • New orders were down 20.3 points, to 65.4
  • Production was down 12.6 points, to 73.1
  • Employment was up 1.4 points, to 69.2
  • Supplier delivery time was up 0.8 points, to 61.5
  • Finished inventory was down 10.7 points, to 50.0
  • Commodity prices were down 13.7 points, to 57.7

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 0.1 points in May, to 54.9. 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 and Howard at 404-874-6244 or simply fill out the form below.

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