The Houston Purchasing Managers Index dropped more than three points in November to 54.6.
The biggest shifts came from steep increases in both purchased inventory and finished goods inventory. Rising inventory indicates a fall in consumption relative to produced goods. That’s borne out by an equally sharp drop in sales.
Mike Valant is business survey chair with the Institute of Supply Management — Houston.
“This is really the third month in a row we’ve seen a decline, and actually it’s the fifth month in a row from the high in May. So, it looks very significantly like sales are definitely on the decline.”
Valant says many respondents blamed the slowdown on concerns that taxes and operating costs will rise in a second Obama administration.
“One company commented [last month] that they will reduce their staff by 1000. They have already reduced their staff by 350, just in one month, due to the anticipated tax repercussions, and the fiscal cliff, and Obamacare was specifically mentioned.”
The PMI indicates likely shifts in production three or four months in advance. It has a range of 0 to 100, with readings over 50 pointing to near term production gains.
Table provided by Institute of Supply Management — Houston.