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Purchasing Managers Index shows rebound in manufacturing

manufacturingKENNESAW, Ga. — Manufacturing activity in the Southeast continued to improve for April, with four of its five components registering readings above 60, according to the Southeast’s Purchasing Managers Index (PMI) report released by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business.

The Southeast PMI increased 1.7 points to 63.2, while the National PMI increased 1.2 points to 54.9. A PMI reading above 50 indicates that manufacturing activity is expanding; a reading below 50 indicates it is contracting.

Six Southeastern states — Alabama, Florida, Georgia, Louisiana, Mississippi and Tennessee — are included in the Econometric Center’s monthly regional report. Five states — Alabama, Georgia, Florida, Louisiana and Tennessee — recorded higher PMIs. Alabama, Florida and Georgia recorded higher employment, accounting for a 5.2-point employment increase.

The April Southeast PMI increase moved the PMI 12.6 points higher than its 50.6 reading in January 2014. New orders, production and employment had increases of 13.3, 13.1 and 11.8 points, respectively, since January, according to Don Sabbarese, director of the Econometric Center at Kennesaw State.

“It appears that this strong manufacturing uptick is more than just a lagged adjustment to winter weather disruptions and its subsequent adjustment,” Sabbarese said. “Even the sharp 7.8-point drop in inventory suggests that manufacturers are partially meeting higher new orders by drawing down their inventory.”

Highlights of the April Southeast PMI include:

  • New orders increased 2.1 points to 72.3, based on increases for Alabama, Florida and Georgia
  • Production increased 2.7 points to 68.1, based on increases for Alabama, Florida, Mississippi and Tennessee
  • Employment increased 5.2 points to 63.8, based on increases for Alabama, Florida, Louisiana and Tennessee
  • Supplier delivery increased 6.0 points to 62.8, based on increases for Alabama, Georgia, Louisiana and Tennessee
  • Finished inventory decreased 7.8 points to 48.9, based on decreases for Alabama, Florida, Georgia and Tennessee
  • Commodity prices increased 14.3 points to 69.1, based on increases for Alabama, Florida, Georgia 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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