Georgia manufacturing activity shows sharp drop for July

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Drop in new orders drives down other components in monthly survey

KENNESAW, Ga.  (August 1, 2014) — Georgia manufacturing activity fell for 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 July decreased by 8.9 points to 48.4.

According to the report, four of the five PMI components dropped for July, with a major drop in new orders, production and finished inventory. Georgia’s new orders for July may be picking up a seasonal influence given a similar drop in July 2013, according to Don Sabbarese, director of the Econometric Center and professor of economics at Kennesaw State.  

“July employment’s 6.7 point increase and a separate question about future production suggest July’s adjustments are an aberration and not a trend change,” Sabbarese said.

“Respondents reported future production expectations increasing for the next three to six months at 27 percent for June and up to 42 percent for July. This question, like new orders, has been volatile for the last three months,” Sabbarese said. “This may mean manufacturers’ expectations are not as stable as we thought.”

Other highlights from the July PMI:

  • New orders down 25.9 points to 39.5, 22.6 points below its six-month average
  • Production down 13.5 points to 50, 11.2 points below its six-month average
  • Employment up 6.7 points to 60.5, 1.3 points above its six-month average
  • Supplier delivery down 7.0 points to 52.6, 5.7 points below its six-month average
  • Finished inventory down 4.8 points to 39.5, 6.7 points below its six-month average
  • Commodity prices up 3.3 points to 55.3, 2.5 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.  

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