Falling Inventories Boost Houston Economic Outlook

The Houston Purchasing Managers Index hit 61.3 in October, tying with August and just short of the 2011 peak set in May and June. The PMI has a range of 0 to 100, with readings over 50 pointing to near term production gains.

Mike Valant is survey chairman with the Institute of Supply Management – Houston. He credits a steep drop in purchased inventory for the stronger outlook.

“People are letting that — their raw material draw down. That’s usually a good indication that, you know, production’s consuming the raw material faster than they can get it in.”

Stronger sales and production also helped boost the October numbers. Lead times rose, reflecting flooding in Thailand and the lingering effects of Japan’s March earthquake and tsunami.

graph from Institute of Supply Management – Houston

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