Manufacturing activity in Georgia decreased in June

Manufacturing activity in Georgia declined for the third straight month in June, a negative turn that has prompted some concern but not necessarily alarm.

The Georgia Purchasing Managers Index, a snapshot of manufacturing activity across the state, fell to 56.9 in June, down from 64.6 in May, according to a report by the Econometric Center at Kennesaw State University's Coles College of Business.

The index has lost 10.7 points since March when it peaked at 67.6. All six factors considered in the survey of manufacturers -- production, new orders, hiring, commodity prices, finished inventory and supplier delivery time -- decreased in June.

A PMI reading of more than 50 indicates that manufacturing activity is expanding while a reading of less than 50 is an indication of contraction. The numbers indicate manufacturing is still growing in Georgia, just not as fast as in the first quarter.

The national PMI increased in June by 1.8 points to 55.3 and still trails Georgia.

"Growth in manufacturing has been losing steam lately, especially in the last month," said Don Sabbarese, director of the Econometric Center.

"But," he added, "this looks like a transitory soft spot tied to high energy prices and problems in Japan's supply chain." The latter were triggered by the earthquake in Japan in March.

Manufacturing is an important part of the overall economy and key to a recovery, as manufacturing firms tend to put proportionally more into the local economy, especially manufacturers that export. Manufacturing jobs in Georgia tend to be better-paying than other fields and have a higher than average "multiplier effect" that supports other jobs.

Sabbarese said, "Over the next two or three months, we will know if the declines are short term or will have a longer term impact."