Georgia Manufacturing Activity Drops for Second Consecutive Month

Donald Sabbarese

Tuesday, February 4th, 2014

Georgia manufacturing activity dropped slightly for January, while the nation experienced a greater decline for the same month, closing the gap between manufacturing activity in the state and the nation, 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, which dropped for the second consecutive month, fell by 3.9 points to 50, while the National PMI decreased 5.9 points to 51.3.

According to the report, Georgia’s new orders have signaled a slowdown in December and January. The new orders in January were down 4.4 points below their six-month average while production was eight points lower than its six-month average. This drop in new orders led to a downward adjustment in production and employment, explained Don Sabbarese, director of the Econometric Center and professor of economics at Kennesaw State.

“Ironically, 57 percent of Georgia’s PMI respondents expect their production for the next three to six  months to increase,” Sabbarese said. “While their response to this question is not used to calculate the PMI, it does suggest that the PMI should improve in the near future,” he added.

Other highlights from the January PMI:

  • New orders down 2.0 points to 45.2, 4.4 points below its six-month average
  • Production down 12.3 points to 40.5, 8.0 points below its six-month average
  • Employment down 3.6 points to 54.8, 0.4 of a point below its six-month average
  • Supplier delivery down 8.7 points to 52.4, 0.2 of a point below its six-month average
  • Finished inventory up 7.1 points to 57.1, 5.9 points above its six-month average
  • Commodity prices down 0.4 of a point to 52.4, 3.9 points below 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.

About Donald Sabbarese

Dr. Don Sabbarese specializes in teaching and research on financial institutions and macroeconomics. He also serves as Director of the Econometric Center where he directs the GEORGIA PURCHASING MANAGERS SURVEY. His work at the Econometric Center has been widely reported in the regional and national media.