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Economic activity in Houston expanded at a slower pace in April than March, according to the most recent Houston Purchasing Managers Index (PMI) prepared by the Institute for Supply Management-Houston. The PMI slipped 3.2 points to 51.6 in April, down from 54.8 in March. Readings over 50 indicate expansion in Houston’s economy, below 50, contraction. Manufacturing sector activity reported a significant rate of contraction while nonmanufacturing activity continues to expand but at a much slower rate.

Two of the three underlying indicators that have the strongest correlation with the Houston economy (employment and lead times) continue pointing to modest economic expansion. The third (sales/new orders) is now pointing to very slow economic contraction. 

• The employment index fell 3.6 points to 53.1 and the lead times index fell 2.1 points to 53.8. 
• The sales/new orders index fell 5.1 points to 49.6.

The finished goods inventory index, the underlying indicator that has the strongest inverse correlation with economic activity, fell 2.8 points to 53.3, giving a modest signal of potential contraction. 

Regarding the two major subcomponents:

• The Houston Manufacturing PMI fell 5.6 points to 45.3, providing a strong indication of potential contraction in this sector. 
• The nonmanufacturing PMI fell 2.7 points to 52.8, showing a lower expansion rate for the industries in this sector.

On an industry specific basis:

• Oil and gas, professional and management services, health care, and construction reported strong expansion. 
• Trade, transportation, and warehousing reported very modest expansion.
• Manufacturing, leisure and hospitality, and real estate reported low to moderate contraction.

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
Senior Vice President, Research
pjankowski@houston.org

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