Monthly Update: Purchasing Managers Index
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Houston’s economic growth slowed considerably in October, according to the most recent Houston Purchasing Managers Index (PMI) prepared by the Institute for Supply Management-Houston. Manufacturing activity contracted while non-manufacturing activity was flat.
The overall PMI slipped 0.3 points from 49.5 in September to 49.2 in October. Though a reading below 50 was previously considered the break-even point for Houston’s economy, additional research by ISM now suggests that the overall economy doesn’t slip into recession until the PMI falls below 45. This month, the manufacturing PMI ticked up 46.8 to 47.7 suggesting mild contraction. The non-manufacturing PMI fell from 50.0 to 49.5 suggesting flatness.
Sales/new orders, employment, and lead times are the top three indicators with a strong positive correlation with the Houston economy.
- Sales/new orders rose 4.5 points to finish at 57.1, well above the neutral point of 50.
- Employment fell 3.8 points to 43.4, the third consecutive month of contraction.
- Lead times slipped 2.0 points to 48.6, signaling weak growth ahead.
The finished goods inventory index, the underlying indicator with the strongest inverse correlation with economic activity, decreased 3.3 points to 49.3.
On an industry-specific basis:
- Construction, transportation, and warehousing reported strong expansion.
- Leisure and hospitality and non-durable goods manufacturing reported moderate expansion.
- Professional services and wholesale trade reported moderate contraction.
- Oil and gas extraction and durable goods manufacturing 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, click here.
Prepared by Greater Houston Partnership Research
Patrick Jankowski, CERP
Chief Economist
Senior Vice President, Research
pjankowski@houston.org
Leta Wauson
Research Director
Greater Houston Partnership
lwauson@houston.org
