Manufacturing activity in Georgia declined significantly in June, accordingto the Econometric Center at Kennesaw State University’s Michael J. Coles College of Business. 

Georgia’s Purchasing Managers Index (PMI)  —  a reading of economic activity in the state’s manufacturing sector  — was down 6.9 points from May, to 55, as  new orders and production  continued to slide. New orders fell 11.8 points, to 53.6; production declined by 10 points, to 55.4. Georgia’s PMI, however, continues to outperform the national PMI reading of 49.7.

“While the Georgia PMI is still above the national figure, Georgia’s decline of 8.8 points over the past two months is significant,” said Don Sabbarese, professor of economics and director of the Econometric Center at the Coles College of Business. “New orders and production for June are 9.5 and 5.8 points below their six-month averages, respectively.”

Other highlights of the June PMI include:

• Employment was up 3.3 points, to  57.1
• Supplier delivery time was down 9.6 points, to 50
• Finished inventory decreased 6.5 points, to 58.9
• Commodity prices were down 8.8 points, to 39.3

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 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.