Houston’s Economy Poised To Expand For First Time In Nearly 2 Years

Purchasing Managers Index is up thanks to higher oil prices.

Photo of Houston PMI report
The Houston PMI for October: It’s the first time it’s above 50, indicating expansion, since December 2014.

The last time the Houston Purchasing Managers Index was above the neutral level of 50 was in December 2014.

Since then the local economy has been contracting. The October report ends a 21-month streak, with the index rising to 51.1 from previously 48.5.

Ross Harvison, with the Institute for Supply Management and creator of the Houston PMI, said a lot of it has to do with the price of oil remaining at above $40 a barrel.

"A lot of the support industries, certainly durable goods, manufacturing, that goes into oil and gas and the services sectors bring up the amount of the economy that is dependent on oil and gas," he said.

The PMI measures economic activity based on eight indicators, including sales, production, employment and purchases across different industries.

A reading above 50 generally indicates economic expansion within the next few months.

So does that mean the economic downturn is over for Houston? Depends on what turn oil prices take next.

"If we stay below $40, which there is a lot of concerns right now that we may be there, I think we'll see some weakening and probably fall back below 50 for the overall PMI for Houston," Harvison said.

The Organization of Petroleum Exporting Countries will have a big impact on that, he said.

OPEC is slated to meet at the end of the month to decide whether they will cut production.

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Florian Martin

Florian Martin

Business Reporter

Florian Martin is currently the News 88.7 business reporter. Florian’s stories can frequently be heard on other public radio stations throughout Texas and on NPR nationwide. Some of them have earned him awards from Texas AP Broadcasters, the Houston Press Club, National Association of Real Estate Editors, and Public Radio...

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