According to Don Sabbarese, Professor of Economics at Kennesaw State University, "The Georgia manufacturing sector improved in February. However, the unusual increase in new orders and production levels are not expected to remain at the February levels, so we expect a lower PMI in March."
March 2016 - Georgia’s Purchasing Managers Index (PMI) — a reading of economic activity in the state’s manufacturing sector — increased 9.6 points during February. The most-improved area was Production; up 26.3 points in February. 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 February respondents:
- "Our industry is doing well and our backlog is into the 3rd quarter.”
- "Oil and Gas industry is affecting our business."
- "To heck with the stock market, business is great and my customers are doing very well."
Other highlights of the February PMI include:
- New orders were up 16.4 points, to 68.4
- Production was down 26.3 points, to 76.3
- Employment was up 4.6 points, to 52.6
- Supplier delivery time was up 3.4 points, to 47.4
- Finished inventory was down 2.8 points, to 63.2
- Commodity prices were up 2.2 points, to 34.2
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 1.3 points in February, to 49.5. 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 accounting group or the distribution industry accounting group of Smith & Howard at 404-874-6244.