Report: Manufacturers seeing fewer new orders, decreasing payroll

Manufacturing activity in the Southeast declined in September, dropping below 50 for the first time this year, 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 gap between the National PMI of 56.2 and the Southeast PMI of 48.5 widened to 7.7 points for September. Despite the 2.1-point drop in the Southeast PMI, the National PMI has registered higher readings than the Southeast PMI for three consecutive months, according to Don Sabbarese, director of the Econometric Center and professor of economics at Kennesaw State.

“This gap is related to a different mix of manufacturers and products. Some national participants may have more export business or are located in regions benefitting from stronger growth in housing, automobile, technology and aircraft industries,” Sabbarese explained. “A PMI below 50 indicates that there are more participants experiencing lower levels of components such as new orders, production and employment from one month to the next. However, these monthly changes may be temporary and minimal in size.”

The Southeast PMI’s dip included decreases for all its underlying components except for a 2.6-point increase for supplier delivery time, Sabbarese said.  National new orders, production, employment, supplier delivery time, and finished inventory recorded higher readings than the Southeast’s respective components.
Six Southeastern states — Alabama, Florida, Georgia, Louisiana, Mississippi and Tennessee — are included in the Econometric Center’s monthly regional report. Three states — Georgia, Louisiana and Tennessee — recorded lower new orders, which contributed to the 2.1-point drop.

Highlights of the September Southeast PMI include:

• New orders decreased 3.3 points to 46.7 based on decreases for Georgia, Louisiana and Tennessee

• Production decreased 3.8 points to 50, based on decreases for  Florida, Louisiana and Tennessee

• Employment decreased 2.8 points to 49.2, based on decreases for Alabama, Louisiana, Mississippi and Tennessee

• Supplier delivery increased 2.6 points to 51.7, based on increases for Alabama, Florida, Georgia, and Tennessee

• Finished inventory decreased 3.1 points to 45, based on decreases for Georgia, Mississippi and Tennessee

• Commodity prices decreased 3.9 points to 56.7, based on price decreases for Alabama, 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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