Business

Report Indicates 17th Consecutive Month Of Economic Contraction In Houston

Wholesale trade and health care show strength, but oil and gas exploration remains weak, according to a new report.

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Houston PMI trend

The latest survey of area supply chain leaders indicates the continued economic slowdown in Houston began with the drop in oil prices 18 months ago.

“Now we have seen increases in oil prices and if we continue to see strengthening, I anticipate that we will start to see a pickup,” said Ross Harvison, with the Institute for Supply Management.

“This month, we did see non-durable goods manufacturing pick up, which is a good thing,” Harvison said. “That’s fairly typical as we move into the summer months, and we’re moving into the driving season.”

Harvison said the Purchasing Managers Index has been a reliable indicator of likely shifts in economic activity several months in advance.

“We typically lead the Dallas Fed’s Business Cycle Index for the Houston area by three to four months,” he said. “What we’re seeing right now, though is a relatively flat PMI for quite a while here and relatively flat showing moderate contraction.”

Although the Houston Purchasing Managers Index rose slightly from its April level of 44.2 to 45.8 in May, many indicators are now pointing towards contraction, which includes sales and new orders, production, employment, purchases and inventory.

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