ISM-Houston Issues January Business Report

(Houston, Texas) – According to Houston area supply chain executives, goods producing industry activity in Houston expanded this month for the first time since September. Services producing industry activity also returned to expansion after two months reporting contraction. Overall economic activity is now expanding at a moderate pace.

The January Houston Purchasing Managers Index rose significantly to 52.5 from last month’s level of 47.4. Two of the three underlying indicators that have the strongest direct correlation with economic activity, employment and lead times, are now pointing to expansion. The third underlying indicator with a strong positive correlation, sales/new orders, remains below neutral. The employment index rose 11.1 points to 58.3. The lead times index rose 0.7 points to 51.2. The sales/new orders index rose 3.6 points to 47.7. The underlying indicator that has the largest inverse correlation, finished goods inventory, rose 7.9 points to 55.3.

The three-month forecast for the Houston PMI rose 1.5 points to 51.2. Strengthening of the sales/new orders, prices paid, and lead times indices drove most of this increase. These indices have a strong direct correlation with economic activity at the three-month forecast horizon.

On an industry specific basis, construction, manufacturing, mid-stream operations, utilities, professional services, and health care reported expansion. Oil & gas and wholesale trade reported further contraction. From a three-month forecast standpoint, modest improvement is predicted.

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.

Click here for the online version of the report

Click here to be directed to the PDF version of the report

ISM-Houston Issues December 2019 Business Report

(Houston, Texas) – According to Houston area supply chain executives, goods producing industry activity in Houston contracted modestly in December. While construction activity improved, it was offset by continued weakness in manufacturing and oil & gas. Services producing industry activity continued to run near neutral. Overall economic activity continued to expand at a very modest rate.

The December Houston Purchasing Managers Index rose modestly to 47.4 from last month’s level of 46.9. Two of the three underlying indicators that have the strongest direct correlation with economic activity, sales/new orders and employment, continue to report below neutral. The third underlying indicator with a strong positive correlation, lead times, returned to just above neutral. The sales/new orders index rose 1.5 points to 44.1. The employment index fell and additional 0.5 points to 47.2. The lead times index rose 0.6 points to 50.5. The underlying indicator that has the largest inverse correlation, finished goods inventory, fell an additional 1.9 points to 47.4.

The three-month forecast for the Houston PMI rose 1.8 points to 49.7. Strengthening of the sales/new orders, production, and lead times indices drove most of this increase. These indices have a strong direct correlation with economic activity at the three-month forecast horizon.

On an industry specific basis, transportation and utilities, and health care reported expansion. Oil & gas, durable goods manufacturing, wholesale trade, and professional services reported contraction. From a three-month forecast standpoint, modest improvement is anticipated for this assessment.

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

Click here to be directed to the online version of this report

Click here to be directed to the PDF version of this report

ISM-Houston Issues November Houston Business Report

(Houston, Texas) – According to Houston supply chain executives, goods producing industry activity in Houston contracted in November for the first time since August of 2017 when Hurricane Harvey impacted local operations. Excluding the slowdown caused by this hurricane, goods producing activity had expanded for 36 months. Construction, which had reported strong growth until this month, is no longer boosting the overall result for this industry group. Overall economic activity continued to expand at a very modest rate.

The November Houston Purchasing Managers Index registered 46.9, down 4.2 points from October. The three underlying indicators that have the strongest direct correlation with economic activity (sales/new orders, employment, and lead times) all fell below neutral and are pointing to near term contraction. The sales/new orders index fell 11.3 points to 42.6. The employment index fell 2.3 points to 47.7. The lead times index fell 1.1 points to just below neutral at 49.9 points. The underlying indicator that has the largest inverse correlation, finished goods inventory, fell 2.8 points to 49.3.

The three-month forecast for the Houston PMI fell 2.1 points to 47.9. Weakening of the sales/new orders, production, prices paid, and lead times indices drove most of this reduction. These indices have a strong direct correlation with economic activity at the three-month forecast horizon.

On an industry specific basis, only health care reported as expanding. Oil & gas, durable goods manufacturing, transportation and utilities, and professional services reported as contracting. From a three-month forecast standpoint, no significant changes are expected in this assessment.

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

Click here to be directed to the online version of this report

Click here to be directed to the PDF version of this report

Capability Assessments

We have proven process maturity model based methods and benchmarking techniques to help you understand where you are compared to your peers and the performance leaders. We’ll work with you to create a transformation plan based on this assessment with a target to implement known, highly effective, procurement practices while meeting your total cost of ownership targets. We’ll also help you execute this plan, ensuring that you deliver both near term quick hits and longer term differential improvement.

READ MORE ABOUT PROCUREMENT CAPABILITY ASSESSMENTS

READ MORE ABOUT OPERATIONS CAPABILITY ASSESSMENTS

Procurement Benchmarking

Significant procurement transformation is hard. If you are like most procurement leaders, you’ve already started a strategic sourcing effort to get quick savings, but you’re finding it hard to figure out what to do next. Do I improve my IT systems to gain efficiency and reduce errors? What if I focus on cleaning up my master data to better understand and control my spend? Should I modify my processes to align them with those I know to be highly effective? Do I focus on changing my organization and improving my staff capability? By now, you’ve probably concluded that you will need to do all of this and more, but you’re struggling to prioritize your efforts.

READ MORE

Procurement Transformation Value

A procurement transformation effort can reduce your costs significantly. For a typical implementation, you will see annual cost savings of 4 to 9% on your services and indirect materials spend. You will also capture fixed cost savings of 20 to 30%. With normal program execution costs equal to 1 to 2% of one year of spend, depending on your organizations size and current capabilities, most procurement organizations will break even during the third year of program execution.

READ MORE