Houston Economy Strengthens

Corona Virus Concerns Moderate

(Houston, Texas) – According to Houston area supply chain executives, overall economic activity in Houston expanded in August for the third month in a row led by modest expansion in non-manufacturing activities. Manufacturing activities contracted at a very slow pace during the month.

The Houston Purchasing Managers Index rose 4.7 points to 52.6 during the month. Two of the three underlying indicators that have a strong direct correlation with the economy, sales/new orders and lead times, pointed to stronger expansion this month. The third, employment, is now giving a very weak signal for contraction. The sales/new orders index rose 2.8 points in August to 56.5. The lead times index also rose 2.8 points to 54.5. The employment index rose 8.4 points to 49.7. The underlying indicator that has the strongest inverse correlation with economic activity, finished goods inventory, rose 1.6 points this month to 51.4, giving a modest contraction signal.

The three-month forecast for the Houston PMI rose 2.3 points to 53.5. This was driven by strengthening in the sales/new orders, production, prices paid indices, and lead times indices. These indices have a strong direct correlation with economic activity at the three-month forecast horizon.

On an industry specific basis, real estate joined accommodations and foods services, transportation, utilities, and health care reporting expansion. Oil and Gas joined construction, durable goods manufacturing, and professional services reporting contraction. All other sectors reported near neutral. The three-month forecast for all sectors indicates a belief that the severity of the COVID-19 pandemic will moderate during this time frame.

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Posted in Houston Business Reports.