Georgia manufacturing activity rebounds for August


Upswing in new orders drives up production and finished inventory KENNESAW, Ga.  (Sept. 2,…

Georgia (Sep 2, 2014)Upswing in new orders drives up production and finished inventory

KENNESAW, Ga.  (Sept. 2, 2014) — Georgia manufacturing activity experienced a rebound in August after a volatile July, according to the Purchasing Managers Index (PMI) released today by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business. The Georgia PMI for August increased 12.9 points to 61.3, moving it slightly above the six-month average of 58.2.

According to the report, four of the five PMI components increased in August. Higher new orders led to higher production, supplier delivery time and finished inventory. Georgia’s August rebound for new orders may be readjusting to seasonal influence, according to Don Sabbarese, co-director of the Econometric Center and professor of economics at Kennesaw State University.  

“August employment’s 4.0-point decrease was the only PMI component to drop,” Sabbarese said. “Although the employment reading fell to 56.5 points, it still remains at a level steady with positive growth. Since August’s PMI is consistent with its long-term growth path, it suggests July’s reading was an aberration.”  

For August, 30 percent of respondents reported future production expectations increasing for the next three to six months. This is down from 42 percent of respondents in July.

Other highlights from the August PMI:

  • New orders up 21.4 points to 60.9, 1.6 points below its six-month average
  • Production up 19.6 points to 69.6, 5.8 points above its six-month average
  • Employment down 4.0 points to 56.5, 2.8 points below its six-month average
  • Supplier delivery up 1.7 points to 54.3, 2.3 points below its six-month average
  • Finished inventory up 25.7 points to 65.2, 16.5 points above its six-month average
  • Commodity prices up 7.8 points to 63, 3.5 points above its six-month average

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. A PMI reading above 50 indicates that manufacturing activity is expanding; a reading below 50 indicates it is contracting.  The 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.

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