Georgia manufacturing is experiencing volatility as it attempts to regain its footing for the third quarter, according to the Purchasing Managers Index released today by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business.
 
The Georgia PMI dropped from 61.3 in June to 54.3 in July, with new orders and production adjusting from their very high levels of 73. Production finished the month at 63.5, while new orders dropped to 55.8. According to Don Sabbarese, director emeritus of the Econometric Center and professor of economics at Kennesaw State University, these month-to-month swings may be due somewhat to seasonal factors.
 
Georgia manufacturer’s new orders and production were driven down as the percent of respondents reporting higher new orders and production slipped from 50 percent in June to 34.6 and 38.5 percent, respectively in July.
 
“New orders is the major contributor to the volatility for the last three months,” said Sabbarese. “Production adjustments are typically tied closely to changes in new orders. Employment on the other hand is more closely tied to longer-term expectations. This is consistent with June and July’s report that 42 percent of respondents expect production to increase in the next three to six months.”
 
Employment remains steady at a level of 59.6, and with 27 percent reporting increased employment in July, up from 25 percent in June.
 
The national PMI decreased 0.8 points to 52.7 and remains 1.5 points below the Georgia PMI of 54.2.
 
Summary of highlights from the July PMI:

New orders down 17.1 points to 55.8, 5.6 points below its six-month average
Production down 9.5 points to 63.5, 2.4 points below its six-month average
Employment up 3.4 points to 59.6 points, 0.8 points below its six-month average
Supplier delivery down 10.3 points to 48.1, 7.7 point below its six-month average
Finished inventory down 1.6 points to 44.2 points, 5.8 points below its six-month average

Commodity prices down 4.5 points to 53.8, 6.1 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.