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Regional Manufacturing Index Jumps in January

Reports from the Atlanta Fed's business contacts indicated that manufacturing in the Southeast improved in early 2013. In particular, information from auto producers and firms that produce goods for the energy sector remained positive.

One of the data tools we employ here at the Atlanta Fed to track manufacturing activity in the region is the Southeast purchasing managers index (PMI). The Southeast PMI is produced by the Econometric Center at Kennesaw State University and provides an analysis of the most current market conditions for the manufacturing sector in Georgia, Florida, Alabama, Tennessee, Mississippi, and Louisiana. The index is based on a survey of representatives from companies in those states regarding trends and activity of new orders, production, employment, supplier delivery time, and finished goods. A reading on this index above 50 represents an expansion in the manufacturing sector, while a reading below 50 indicates a contraction.

In January 2013, the Southeast PMI increased 5.5 points to a reading of 51.9—its highest level since last September (see the chart). All subindices logged increases as well, in particular new orders, production, and employment. New orders saw the most substantial increase, jumping 12.6 points from December to January to 55.3. Production rose 9.1 points to 50.9, and the employment measure recorded a 3.4 point rise to 51.8.

One of the most encouraging aspects of the January survey reflects the purchasing managers' outlook on production expectations over the next three to six months. While this question is not a component of the overall PMI, this information provides input from those closest to the industry on what activity is expected in the months ahead. Among survey participants, 57 percent expect production to be higher in the next three to six months, versus 47 percent from the prior survey period.

By Amy Pitts, a senior REIN analyst in the Atlanta Fed's Nashville Branch

February 13, 2013 in Manufacturing , Purchasing | Permalink


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