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Manufacturing index shows stronger August for goods-makers

manufacturingKENNESAW, Ga. — Southeast manufacturing activity saw a rebound in August, reversing an 8.5-point slide in June and July, 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 for August increased 5.6 points to 56.7, moving it closer to the national average of 59.

According to the report, four of the six PMI components increased in August. New orders and production saw the largest increase of 11.2 and 12.1 points, with 35.2 and 38.9 percent of respondents reporting higher new orders and production. This growth may signal a strong third quarter, according to Don Sabbarese, co-director of the Econometric Center and professor of economics at Kennesaw State University.

Six Southeastern states — Alabama, Florida, Georgia, Louisiana, Mississippi and Tennessee — are included in the Econometric Center’s monthly regional report. Two states — Georgia and Tennessee — recorded lower PMIs.

“Southeast manufacturing’s higher new orders, production and finished inventory suggest that southeast manufacturing is improving in the third quarter,” Sabbarese said. “Further support for that observation is 44 percent of respondents in August expect their production to increase in the next three to six months.”

Highlights of the August Southeast PMI include:

  • New orders increased 11.2 points to 56.5, based on increases for Alabama, Georgia, Louisiana and Tennessee
  • Production increased 12.1 points to 60.2, based on increases for Alabama, Georgia and Tennessee
  • Employment decreased 3.9 points to 56.5, based on decreases for Alabama, Florida, Georgia, Louisiana and Mississippi
  • Supplier delivery decreased 1 point to 54.6, based on decreases for Alabama, Florida, Georgia and Tennessee
  • Finished inventory increased 8.4 points to 55.6, based on increases for Alabama, Georgia and Louisiana
  • Commodity prices increased 0.8 of a point to 58.3, 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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