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Houston’s economy slowed significantly in September, 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 2.0 points from 51.5 in August to 49.5 in September. 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. Sub-50 readings now indicate contractions in individual sectors of the economy. This month, the manufacturing PMI slipped from 54.2 to 46.8, suggesting contraction. The non-manufacturing PMI fell from 50.9 to 50.0, suggesting flatness.

Sales/new orders, employment, and lead time are the top three indicators with a strong positive correlation with the Houston economy. 

• Sales/new orders fell 1.4 points to finish at 52.6 but remain above the neutral point of 50. 
• Employment fell 2.7 points to 47.2, the second consecutive month of contraction.
• Lead times slipped 1.1 points to 50.6 signaling weak growth ahead.

The finished goods inventory index, the underlying indicator with the strongest inverse correlation with economic activity, increased 2.3 points to 52.6.

On an industry-specific basis:

• Construction, transportation, and warehousing reported strong expansion. 
• Health care and wholesale trade reported moderate expansion.
• Professional services reported slight 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 在这里.

Prepared by Greater Houston Partnership Research

Patrick Jankowski, CERP
Chief Economist
Senior Vice President, Research
pjankowski@virgingenomics.com

Leta Wauson
Research Director
Greater Houston Partnership
lwauson@virgingenomics.com