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Economic activity in Houston expanded at a significantly faster pace last month, according to the most recent Houston Purchasing Managers Index (PMI) prepared by the Institute for Supply Management-Houston. The PMI rose to 52.7 in February, up from 50.8 in January. Readings over 50 indicate expansion in Houston’s economy, below 50, contraction. 

All three underlying indicators that have the strongest correlation with the Houston economy, sales/new orders, employment, and lead times, now point to modest expansion. 

• The sales/new orders index rose 4.2 points to 51.4.
• The employment index fell 2.1 points, but still remains positive at 53.2. 
• The lead times index rose 5.7 points to 54.4.

The finished goods inventory index, the underlying indicator that has the strongest inverse correlation with economic activity, fell 3.9 points to 49.1, giving a modest signal of economic expansion.

Regarding the two major subcomponents:

• The Houston Manufacturing PMI rose 0.1 points to 48.7, continuing to give a marginal contraction signal.
• The Non-Manufacturing PMI rose 2.3 points to 53.5, showing a higher expansion rate for the industries in this sector.

On an industry specific basis:

• Oil and gas, health care, construction, and professional and management services reported continued expansion. 
• Trade, transportation, and warehousing returned to reporting modest expansion.
• Manufacturing, leisure and hospitality, and real estate reported near neutral.
• No sector 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