Southeast manufacturing activity slowed in December primarily due to decreases in new orders and production, according to the Southeast’s Purchasing Managers Index (PMI) report released today by Kennesaw State University’s Econometric Center in the Michael J. Coles College of Business. 

The Southeast PMI decreased 12.7 points to 45.6 in the month of December. New orders and production experienced sharp decreases of 27 and 19.8 points, respectively. Both readings reverse very strong readings for the previous two months, according to Don Sabbarase, director emeritus 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. All six experienced lower PMI readings. 

“Southeast manufacturing’s low level of new orders and production were driven by only 14 and 16 percent of respondents reporting increased levels for December,” Sabbarese said. “The positive is that December’s report may overstate manufacturing’s current weakness. Outside of the PMI index, 66 percent of respondents expect production to increase in the next three to six months, up from 51 percent in November. Also, the PMI is not seasonally adjusted, so December’s numbers may be the result of seasonal weakness.” 

Highlights of the December Southeast PMI include:  

· New orders decreased 27 points to 34, based on decreases for all states except Florida

· Production decreased 19.8 points to 40, based on decreases for all states except Louisiana

· Employment decreased 10.6 points to 54, based on decreases for all states except for Louisiana

· Supplier delivery time decreased 7.3 points to 50, based on decreases for Alabama, Florida, Louisiana and Tennessee

· Finished inventory increased 1.2 points to 50 based on increases for Georgia and Louisiana

· Commodity prices decreased 10.4 points to 42, based on decreases for all six states

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.