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Houston’s economy expanded at a modest pace in May, according to the most recent Houston Purchasing Managers Index (PMI) prepared by the Institute for Supply Management-Houston. The overall PMI, which measures broad economic activity according to a survey of supply chain executives, was 48.2 in May, a slight decrease from 48.5 in April – but still above the break-even point of 45 indicating economic expansion. Manufacturing contracted significantly, dropping from 48.9 in April to 43.4 last month, due to weakness in nondurable goods. Non-manufacturing was closer to neutral at 49.1.  

Prices paid for inputs increased for the second month following the implementation of wide-scale tariffs. At 56.1, price growth was less significant than the 56.5 experienced in April.
All three PMI indicators most strongly correlated with Houston’s economic growth contracted:
•    Sales/new orders at 49.6 contracted for the third consecutive month.
•    Employment at 45.6 contracted for the second month in a row. 
•    Lead times dropped to 49.5 after expanding last month.

On an industry-specific basis:
•    Health care, wholesale and retail trade, and transportation and warehousing reported strong expansion.
•    Construction, durable goods manufacturing, and professional and business services reported moderate expansion.
•    Nondurable goods manufacturing, oil and gas extraction, and 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, click here.

Prepared by Greater Houston Partnership Research

Colin Baker
Manager of Economic Research
Greater Houston Partnership
bakerc@houston.org

Clara Richardson
Analyst, Research
Greater Houston Partnership
crichardson@houston.org