The National Association of Purchasing Management Houston Inc.,

..........HOUSTON, June 10th - The Houston PMI (Purchasing Managers Index) turned a sharp corner in May and moved into growth territory after seven months of economic contraction. The PMI was 51.1 for the month as compared with 46.3 for April. (50 is breakeven) The distinct turn-around was driven by a significant improvement in the reported Sales index and a substantial deceleration of losses in Production rates. The Sales rate has been erratic since Fall 2001, but had been in general contraction for six of the last seven months.

..........The Houston PMI, which can range from 0 to 100, is a leading indicator for industrial production, typically forecasting change by three to four months. A reading above 50 indicates that the Houston economy is generally expanding. A reading below 50 indicates the economy is generally contracting. The PMI is based on a monthly survey of some 80 purchasing executives in leading Houston industries, including oil and gas exploration and production, manufacturing, engineering and construction, chemicals, distribution, business and financial services and healthcare, among others.

.........."Sales went positive after falling at a worrying rate in April. The magnitude of the reversal was somewhat surprising but the vacillation of the past six months has indicated clearly that there is no fundamental motivation behind the numbers," said Doug Miller, Chairman of the NAPM-Houston Business Survey Committee. "The indices, and therefore the PMI, may continue to waver while tending to become more positive over the next quarter or two."

..........There are eight components of the PMI, including Sales, Production, Employment, Purchases, Prices Paid, and Inventory levels.

.........."Employment losses moderated in May, but new job creation will only begin when Sales and Production pressures forcibly drag the job numbers up. Employers seem very reluctant to add personnel until they have the Sales backlogs they perceive as ample justification," said Miller. "With Prices remaining virtually flat, it appears likely that Sales will lead the way toward greener pastures, even if not on a straight line."

NAPM - HOUSTON BUSINESS REPORT
For further information, contact Douglas R. Miller, C.P.M. - 713-988-7306