Business

Houston-Area Sales Show Worst One-Month Drop Since 2009

Purchasing managers blame falling oil prices for the contraction.

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The Houston Purchasing Managers Index sank to 54.3 percent in November, down from 58.5 percent in October. The index has a range of 0 to 100. Readings over 50 generally indicate production will expand over the coming months. Still, November marked the steepest one-month decline for the index in more than four years.

“It is very concerning. It’s been middle of 2009 since we saw sales at a contracting level,” says Ross Harvison, vice president of the Institute for Supply Management – Houston.

Responses to the survey varied widely by industry. “Some groups were not very strong in their responses, particularly oil and gas and support activities,” Harvison says. “They’re a big part of the weakening numbers, because there’s a lot of concern on the falling oil and gas prices.”

Manufacturers also expressed concerns, in part because of the prospect of stiffer foreign competition. U.S. manufacturers use natural gas liquids as raw materials. For several years, the availability of cheap, domestically produced gas has given such producers a competitive edge over those in Europe and Asia, who rely on liquids derived from crude oil.

In addition to a sharp drop in sales, November brought a significant decline in purchases, along with an increase in inventories of finished goods. Harvison says all of those indicators point to a slowdown in economic growth.

 

The Houston Purchasing Managers Index:

 



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Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media’s coverage of national, state, and local elections. He also reports on major policy issues before the Texas Legislature and county and city governments across Greater Houston. Before taking up his current post, Andrew spent five years as Houston Public Media’s business reporter, covering the oil...

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