Houston Economic Indicators

Houston’s labor market grew modestly during the three months ending in September. The Houston Purchasing Manager's Index and the Houston Leading Index were flat in November, and indexes of manufacturing input prices showed a deceleration in growth. Well completions and retail gasoline prices continued to dipped in the fourth quarter.

Purchasing managers index

Purchasing managers, Houston leading indexes flat

The Houston Purchasing Manager’s Index (HPMI) declined to 50.9 in November 2025 from 53.7 in October, as a smaller share of respondents reported expanding economic conditions (Chart 1). Index values above 50 generally indicate growth in the regional economy, while those below 50 indicate contraction.

The subcomponents of HPMI showed moderate growth in new orders in November though at a slower pace than in October. Inventories of finished goods and prices paid also expanded in November. However, the production and employment indexes were flat, and lead times fell.

Houston Leading Index decelerates

The Houston Leading Index (HLI) decelerated to 0.0 percent growth over the three months ending in November from 1.1 percent growth over the three months ending in August (Chart 2). Taken together, a flat HPMI and HLI suggest that over the next three to nine months local job growth will remain anemic, leaving little room to absorb any further negative shocks.

A mix of strong and weak indicators netted out to flat growth for November. Strength in equity valuations, new orders and production was tempered by weakness in, the Texas Leading Index, home sales, oil prices, railcar loadings and the national business cycle.

Employment in Houston ticked up in recent data, growing an annualized 1.0 percent over the three months ending in September. The recent uptick in job growth was foreshadowed by accelerations of the HLI and HPMI in July and August. The Dallas Fed's early benchmark of second-quarter employment data will be incorporated in the next edition of the Houston Economic Indicators.

Input price growth declines

The three-month moving average diffusion index for input prices paid in Houston decelerated to 0.9 in November 2025 from 10.6 in August (Chart 3). Smoothed diffusion indexes for input prices in Texas and the U.S. similarly dipped but remained positive. The national manufacturing prices paid index declined from 33.1 in August to 27.3 in November. The Texas Manufacturing Outlook Survey (TMOS) prices paid index declined from 42.8 in August to 37.4 in November.

It is worth noting that year to date, input price growth for Houston firms has diverged from growth in input prices for state and national manufacturers. From December 2024 through November 2025, the Houston index declined from 11.0 to 0.9 while both TMOS and the U.S. input price diffusion indexes increased significantly. Houston firms may be cushioned from a national trend of increasing input prices by lower oil prices. Many firms in Houston use piped oil and natural gas from Texas’ interior as feedstocks for the production of plastics, petrochemicals and other refined petroleum products.

Energy

U.S. well completions decline in fourth quarter

The number of new wells completed in the U.S. averaged 943 over the three months ending in November 2025, down from 970 in August (Chart 4). Average monthly well completions hit a 12-month high in May 2025 of 1,064. West Texas Intermediate oil spot prices in October and November averaged around $60 per barrel—below the average reported break-even prices for new wells, particularly among smaller producers.

Nonetheless, combined daily U.S. production of crude oil and gross withdrawals of natural gas from the lower 48 states reached an all-time high of 33.3 million barrels of oil equivalent per day in September 2025—which is inclusive of the field production of natural gas liquids like ethane, propane, and butane. Production grew 4.6 percent year over year in September.

Retail gas prices decline

The retail price of gasoline in Houston declined from $2.68 per gallon the week of Sept. 1, 2025, to $2.42 per gallon the week of Dec. 8 (Chart 5). Year over year, the price of gasoline in Houston declined 5.3 percent. The decline in retail gasoline price reflects both seasonal variation and a decline in crude oil prices. Crude oil makes up about half of the price of gasoline.

However, diesel prices also declined slightly from $3.37 in early September to $3.33 the week of Dec. 8, but year over year, the price increased 6.3 percent.

To put these into perspective, adjusting for inflation to current dollars, retail gasoline and diesel prices in Houston were $2.62 and $3.21 a year ago and $2.70 and $3.84 this time of year in 2019.