Drop in Houston Inventories Points To Near-Term Production Growth

declining arrowThe Institute for Supply Management – Houston is reporting that inventories of raw materials dropped 5 points on the Purchasing Managers Index — to 8 in September from 13 in August.

“Which means they’re probably not buying ahead like they have been. That’s a concern, for sure.”

Mike Valant is chairman of the ISM Houston Business Committee. He says the September PMI also finds that finished goods inventories tumbled 20 points to -23, from 3 in August. Valant describes that as a strong showing.

“The demand has actually slowly depleted their finished goods inventories, which just means their sales is higher than what they’re producing.”

The overall Purchasing Managers Index for the Houston economy dropped half a point in September to 60.8, down from 61.3 the previous month. The index has a possible range of 0 to 100, with readings over 50 indicating production gains over the near term.

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