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Economic activity in Houston expanded at a somewhat slower pace in October, according to the most recent Houston Purchasing Managers Index (PMI) prepared by the Institute for Supply Management-Houston. The PMI registered 52.9 in October, down from 54.2 recorded in September. Readings over 50 generally 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 28 consecutive months. 

Two of the underlying indicators that have the strongest correlation with the Houston economy fell considerably in October while the third showed stronger expansion. 

• The sales/new orders index fell 6.6 points to 47.8, indicating contraction. This is the first month its dipped below 50 since July ’20.
• The lead times index fell 2.7 points to 51.1, indicating slower growth.
• The employment index rose 3.9 points to 59.3, pointing to stronger expansion. 

The finished goods inventory index, the underlying indicator that has the greatest inverse correlation with economic activity, rose 4.3 points to 55.7, giving a stronger indication of contraction.

The Houston Manufacturing PMI fell 3.9 points to 50.8, pointing to very modest expansion. The non-manufacturing PMI fell 0.9 points to 53.2, showing modestly slower expansion for the industries in this sector.

On an industry-specific basis, health care, professional and management services, oil and gas, construction, transportation, trade, and warehousing reported strong expansion. Manufacturing and leisure and hospitality reported very modest expansion. Real estate, specifically housing, 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