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Georgia > Manufacturing Levels Drop

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Georgia Business

ATLANTA — Manufacturing in Georgia fell 4.7 points to 54.8 in the month of May, driven down by sharp adjustments for new orders and production according to the Purchasing Managers Index (PMI) released today by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business.

While Georgia manufacturers have seen slight dips in the overall PMI from February through April, new orders and production maintained strong averages of 63.9 and 68.9, respectively. May’s new orders and production readings of 47.6 and 52.4 fell well below those averages, causing the sharpest decline of the year.

“These numbers raise the question of whether or not this is a one-month adjustment or a more persistent change,” said Don Sabbarese, director emeritus of the Econometric Center and professor of economics at Kennesaw State University. “The next three months will offer a clearer answer to that question.”

The national PMI increased 1.3 points to 52.8, but still trails the Georgia PMI of 54.8 by 2.0 points.

One positive glimpse into the future was an increase to 43 percent of May respondents anticipating higher production in the next three to six months, up from 40 percent in April. At the same time there was an increase to 14 percent of respondents anticipating lower production in the next three to six months, up from zero in April. Employment made a modest increase of 1.9 points, putting it 1.6 points above its six-month average.

Other highlights from the May PMI:

• New orders down 12.4 points to 47.6, 8.2 points below its six-month average
• Production down 15.1 points to 52.4, 9.7 points below its six-month average
• Employment up 1.9 points to 61.9 points, 1.6 points above its six-month average
• Supplier delivery up 6.8 points to 64.3, 7.5 points above its six-month average
• Finished inventory down 4.9 points to 47.6 points, 2.1 points below its six-month average
• Commodity prices up 0.1 of a point to 47.6, 5.6 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.

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