Houston Sales, Production Levels Stumble

The Houston Purchasing Managers Index fell to 59.1 in March — down half a point from February. Sales gave up most of their gains from a February surge, though they remained above January levels. Falling sales triggered a drop in production to its lowest point in more than nine months.

Mike Valant, survey chairman with the Institute of Supply Management – Houston, says a pullback in domestic drilling may be partly to blame. Valant says there are a few positive indicators in the March numbers.

“The physical inventories — the actual material in stock went down. That’s probably a result of the increase in production from last month. And the finished goods inventory was way down, and that indicates that they are selling what they’ve built. Those two, when they go in reverse like they are, that’s usually a good indication of consumption.”

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.

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