Manufacturing activity in Georgia continued to decline in July, according to 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 3.2 points from June, to 51.8, with employment and finished inventory accounting for the decline. Employment fell 9.4 points, to 47.7; finished inventory fell 11.2 points, to 47.7. Georgia’s PMI continues to outperform the national PMI reading of 49.8.

“Georgia’s PMI decline in May and June signaled a change in direction, but until then, employment remained relatively strong. That was not the case for July,” said Don Sabbarese, professor of economics and director of the Econometric Center at the Coles College of Business. “The recent three-month decline in the PMI is cause for concern.”

Other highlights of the July PMI include:

• New orders were up 3.2 points, to 56.8

• Production was down 0.8 point, to 54.5

• Supplier delivery time was up 2.3 points, to 52.3

• Commodity prices were up 3.9 points, to 43.2

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. 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.