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Economic activity in Houston expanded at a somewhat slower pace in December, according to the most recent Houston Purchasing Managers Index (PMI) prepared by the Institute for Supply Management-Houston. The PMI registered 53.8 in December, down from 54.7 recorded in November. Readings over 50 indicate expansion in Houston’s economy, below 50, contraction. Since rising above 50 in August ’20, the Houston PMI has indicated strong to moderate local growth for 29 consecutive months. 

Two of the underlying indicators that have the strongest correlation with the Houston economy, sales/new orders and employment, fell in December indicating weaker expansion.  The third, lead times, rose above neutral, indicating a potential for economic expansion. 

• The employment index fell 3.3 points to 58.6. 
• The lead times index rose 3.4 points to 52.7. 
• The finished goods inventory index, the underlying indicator that has the strongest inverse correlation with economic activity, fell 2.5 points to 51.6, giving a lower indication of contraction.

The Houston Manufacturing PMI fell 0.8 points to 50.2, giving neither an expansion nor contraction signal.

The non-manufacturing PMI fell 0.9 points to 54.5, showing a slower expansion rate for the industries in this sector.

On an industry-specific basis, professional and management services, construction, oil and gas, leisure and hospitality, and health care reported continued expansion. Manufacturing, trade, and transportation/warehousing reported near neutral. Real estate reported significant 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