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Manufacturing index reverses, falls by 3.8 points

manufacturingKENNESAW, Ga. — Manufacturing activity reversed its previous two-month climb in the Southeast, widening the gap between the region and the nation, according to the Southeast Purchasing Managers Index (PMI) report released by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business.

According to the report, the Southeast PMI fell by 3.8 points for December based on the weakness of lower new orders and production. The Southeast PMI slipped below 50 to 48.4, while the National PMI decreased 0.3 of a point to 57.

Six Southeastern states — Alabama, Florida, Georgia, Louisiana, Mississippi and Tennessee — are included in the Econometric Center’s monthly regional report. Four states — Alabama, Florida, Georgia and Tennessee — recorded lower new orders, and all six states recorded lower production, which contributed to the 3.8-point drop.

“Since employment did not change and more than half of the respondents expect production to increase in the next three to six months, this drop in new orders and production may be related to a seasonal slowdown in December rather than a longer-term trend change,” said Don Sabbarese, director of the Econometric Center at Kennesaw State.

Highlights of the December Southeast PMI include:

  • New orders decreased 12.2 points to 42.9 based on decreases for Alabama, Florida, Georgia and Tennessee
  • Production decreased 12.2 points to 42.9, based on decreases for all six states
  • Employment remained unchanged at 52
  • Supplier delivery increased 2.0 points to 55.1 based on increases for Florida and Georgia
  • Finished inventory increased 3.1 points to 49, based on increases for Alabama, Florida and Tennessee
  • Commodity prices increased 10.2 points to 60.2, based on increases for Georgia, Louisiana, Mississippi and Tennessee

The Southeast 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.

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