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Economic activity in Houston continued to expand in August, but at a moderately slower pace than in July, according to the most recent Houston Purchasing Managers Index (PMI) prepared by the Institute for Supply Management-Houston. The PMI registered 54.2 in August, down slightly from 55.6 in July. Readings over 50 generally indicate expansion in Houston’s economy, below 50, contraction. Since rising above 50 in August ’20, the Houston PMI has indicated strong local growth for 26 consecutive months. However, the pace of that growth has trended down since October of last year.

Sales/new orders, production, and employment—the three subcomponents of the PMI with the strongest direct correlation to economic growth—fell in August compared to July but still reported readings above 50. 

The finished goods inventory PMI ticked up to 52.6, which is a cause for concern. A plus-50 reading suggests inventories are rising faster than sales and hints a pullback in production may soon be in store. The finished goods PMI has tracked above 50 for five consecutive months. 

On a broad basis, manufacturing expanded at a moderately slower pace in August while non-manufacturing activity expanded at a slightly higher pace. This aligns with what ISM is reporting at the national level. 

On an industry specific basis, construction, leisure and hospitality, health care, professional and management services, transportation, trade, and warehousing reported strong expansion. Oil and gas, manufacturing, and real estate reported very modest expansion.

The PMI is published monthly by the Institute for Supply Management – Houston and is based on a survey of supply chain executives in the region.  For additional information on the index, click here.

Prepared by Greater Houston Partnership Research

Patrick Jankowski, CERP
Chief Economist and Senior Vice President, Research
Greater Houston Partnership
pjankowski@houston.org

Clara Richardson
Research Associate
Greater Houston Partnership
crichardson@houston.org