Georgia’s manufacturers continued to expand their operations last month, with a key index Friday showing increases in production, finished inventory, deliveries and employment, but a slowdown may be on the horizon.
The monthly Purchasing Managers Index Report from Kennesaw State University’s Econometric Center rose to 54.5 in October, up nearly 5 points from September and above 50 for the first time since June.
A reading above 50 indicates manufacturing is expanding in textiles, food and beverage, technology, appliances, machinery and an array of other industries.
The October reading was also the second straight month the index was higher, according to Don Sabbarese, director of the Econometric Center. He said the state’s manufacturing sector appears to be finally catching up with the rest of the country, but that could change.
Indecision in Washington, including the impact of the Affordable Care Act, or Obamacare, on business decisions, may cloud the manufacturing outlook in the months ahead, Sabbarese said. Forty-five percent of purchasing managers questioned in October anticipate lower production in the next three to six months.
“Some of these businesses are saying some of their customers are leery about making orders and doing different things because of the fair amount of uncertainty coming out of Washington,” Sabbarese told The Atlanta Journal-Constitution on Friday. “It’s a mixed bag.”
Georgia’s biggest gains in October were in new orders to factories, with the index for that category up 26 percent from September’s reading. Fewer reported a drop in orders and more reported an increase. Manufacturers also finished more inventory — meaning it’s ready to be shipped — with the index for that category up 21 percent from the previous month.
Employment also remained strong, although the index does not say whether gains were for part-time, temporary or full-time factory workers.
Another positive sign was a drop in the prices manufactures pay for raw materials, declining in October from September. “Globally, a lot of commodity prices are declining and certainly that helps in the cost of operations, and that’s always a positive for businesses,” Sabbarese said.
Compared with the rest of the Southeast and nation, Georgia’s manufacturing gains were larger last month, but the state also has had more ground to catch up, at least compared with the national PMI report.
