The Houston Purchasing Managers Index (PMI), a short-term leading indicator for regional production, registered 48.5 in September, up from 46.1 in August, according to the latest report from the Institute for Supply Management-Houston (ISM-Houston). Although the PMI continues to show economic contraction, the September reading is the highest since July ’15.
The PMI has a possible range from zero to 100. Readings above the neutral point of 50 indicate likely growth in production over the next three to four months; readings below 50 suggest contraction. With the September reading, the PMI has signaled economic contraction in Houston for 21 consecutive months.
“Health care remained the strongest sector, reporting moderately above neutral,” reports Ross Harvison, ISM-Houston Business Survey Committee Chair. “Durable goods manufacturing, non-durable goods manufacturing, oil and gas, transportation, wholesale trade and most services activities reported near neutral. Engineering and construction continued to report well below neutral results.”
The Partnership has been tracking the PMI since its inception in January ’95. The alltime low for the Houston PMI was in March ’09, when the indicator fell to 39.0. The all-time high was in January of ’06, when the PMI reached 67.9. Over the past 21 years, the PMI has tracked at 50 or above for 212 months and below 50 for 49 months.
The Houston PMI is derived from monthly surveys of local purchasing managers representing various industries such as manufacturing, healthcare, electronics, finance and energy. The index is based on eight components: sales/new orders, production, employment, purchases, prices paid, lead times, purchased inventory and finished goods inventory.
Prepared by Greater Houston Partnership Research Department
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