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ISM-Houston Issues October 2019 Houston Business Report

Overall Economic Expansion Continues – Manufacturing Respondents Confirm Weakness

 

(Houston, Texas) – According to Houston supply chain executives, goods producing industry activity in Houston expanded in October. Construction, which has reported strong growth all year, boosted the overall result for this industry group. On a stand-alone basis oil & gas and manufacturing, the remaining industries in this group, have reported moderate contraction for several months. This accelerated somewhat in October. Services producing industry and overall economic activity expanded.

The October Houston Purchasing Managers Index registered 51.1, down 2.4 points from a month earlier. The three underlying indicators that have the strongest direct correlation with economic activity (sales/new orders, employment, and lead times), while weakening, continue to point to near term expansion. The sales/new orders index fell 1.7 points to 53.9. The employment index fell 4.4 points to neutral. The lead times index fell marginally to 51.0. The underlying indicator that has the largest inverse correlation, finished goods inventory, rose an additional 0.3 points to 52.1.

The three-month forecast for the Houston PMI fell 0.8 points to neutral. Strengthening of the prices paid index was offset by weaker sales/new orders and lead times indices. These indices have a strong direct correlation with economic activity at the three-month forecast horizon. This forecast is highly dependent on continued services producing industry strength.

On an industry specific basis, both services producing and goods producing industries indicated moderate growth at a slower pace. Health care, transportation and utilities, and construction reported expansion. As noted above, oil & gas and manufacturing reported contraction. From a three-month forecast standpoint, construction, transportation and utilities, and health care are expected to continue to expand.

The Houston PMI provides a measure of current economic activity in the greater Houston area and a forecast of likely shifts in activity over a three-month forecast horizon. These indicators have a possible range of 0 to 100. Readings over 50 generally indicate goods producing industry expansion; readings below 50 show contraction. A PMI above 45 generally correlates with expansion of the Houston-The Woodlands-Sugar Land Business Cycle Index. The current and forecast PMI indices are based on diffusion indices for eight underlying indicators: Sales/New Orders, Production, Employment, Purchases, Prices Paid, Lead Times, Purchase Inventory, and Finished Goods Inventory.

The Institute for Supply Management – Houston has published the Houston Purchasing Managers Index monthly since January 1995 as a service to its members and the greater Houston business community.

Ross Harvison, CPSM
ISM-Houston, Inc.
Business Survey Committee Chair

 

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0 comments on “ISM-Houston Issues September 2019 Houston Business Report”

ISM-Houston Issues September 2019 Houston Business Report

Sales/New Orders and Employment Strengthen – Lead Times Moderate

(Houston, Texas) – According to Houston supply chain executives, manufacturing activity in Houston expanded in September for the 25th consecutive month and overall economic activity expanded for the 38th month. The near-term forecast continues to point to overall economic growth. The overall rate of growth is anticipated to moderate to close to neutral at the 3-month forecast horizon.

The September Houston Purchasing Managers Index registered 53.5, up 1.9 points from its August reading of 51.6. The three underlying indicators that have the strongest direct correlation with economic activity (sales/new orders, employment, and lead times) continue to point to near term expansion. The sales/new orders index rose 4.3 points to 55.6. The employment index rose 3.7 points to 54.4. The lead times index fell 2.8 points to remain above neutral at 51.1. The underlying indicator that has the largest inverse correlation, finished goods inventory, rose 3.0 points to return above neutral at 51.8.

The three-month forecast for the Houston PMI was relatively unchanged at 50.8, up 0.1 points from its August reading. Strengthening of the sales/new orders index was offset by weaker lead times and prices paid indices. These indices have a strong direct correlation with economic activity at the three-month forecast horizon.

On an industry specific basis, both Service Producing and Goods Producing industries improved in overall performance. Professional services, health care, transportation and utilities, and EPC firms reported expansion. All other sectors reported near neutral. From a three month forecast standpoint, construction, transportation and utilities, and health care are expected to continue expansion.

The Houston PMI provides a measure of current economic activity in the greater Houston area and a forecast of likely shifts in activity over a three-month forecast horizon. These indicators have a possible range of 0 to 100. Readings over 50 generally indicate manufacturing expansion; readings below 50 show contraction. A PMI above 45 generally correlates with expansion of the Houston-The Woodlands-Sugar Land Business Cycle Index. The current and forecast PMI indices are based on diffusion indices for eight underlying indicators: Sales/New Orders, Production, Employment, Purchases, Prices Paid, Lead Times, Purchase Inventory, and Finished Goods Inventory.

The Institute for Supply Management – Houston has published the Houston Purchasing Managers Index monthly since January 1995 as a service to its members and the greater Houston business community.

 

Ross Harvison, CPSM
ISM-Houston, Inc.
Business Survey Committee Chair

 

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0 comments on “ISM-Houston Issues August 2019 Houston Business Report”

ISM-Houston Issues August 2019 Houston Business Report

Sales/New Orders Return to Growth

Manufacturing Concerns Moderate

By Ross S. Harvison, CPSM

(Houston, Texas) – According to Houston supply chain executives, manufacturing activity in Houston expanded in August for the 24rd consecutive month and overall economic activity expanded for the 37th month. The near-term forecast continues to point to overall economic growth. Concerns about potential near term manufacturing weakness have moderated somewhat. The overall rate of economic growth is now anticipated to be flat for the 3-month forecast horizon.

The August Houston Purchasing Managers Index registered 51.6, up very modestly from its July reading of 51.4. The three underlying indicators that have the strongest direct correlation with economic activity (sales/new orders, employment, and lead times) are all pointing to near term expansion. The sales/new orders index returned to indicating expansion for the first time in three months coming in at 51.3. The employment index, while continuing to point to expansion, fell to near neutral at 50.7. The lead times index rose modestly to 53.9. The underlying indicator that has the largest inverse correlation, finished goods inventory, fell further below neutral to 48.8.

The three-month forecast for the Houston PMI registered above neutral at 50.7, up 2.0 points from its July reading of 48.7. Strengthening of the sales/new orders, lead times, and prices paid indices were the primary drivers for this forecast HPMI improvement. These indices have a strong direct correlation with economic activity at the three-month forecast horizon.

On an industry specific basis healthcare, transportation and utilities, EPC firms, and non-durable goods manufacturing reported expansion, while non-durable goods manufacturing reported continued contraction. From a three-month forecast standpoint Transportation and Utilities and Health Care are expected to continue expansion.

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Procurement Maturity Assessments

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