Symptoms pointing to health care slump
For the nearly two years since oil and gas employment fell off a cliff, health care has been Houston’s saving grace.
Employment in the sector grew by 9 percent between June 2014 and June of this year, to 565,000 jobs, as mega-facilities like Texas Children’s Hospital, Memorial Hermann Health System and the University of Texas M.D. Anderson Cancer Center beefed up.
Some thought that health care was even immune from the swings of Houston’s fossil-fuel driven economy, since hospitals and research centers brought in patients and grant funding from
out of state.
That thesis is starting to look a little shaky, though, with the July Purchasing Managers Index showing that the sluggish local economy is getting to the health care industry as well.
The index, published by the local chapter of the Institute for Supply Management, combines data on hiring, inventories, sales, production, and prices paid for goods into one number that indicates whether the economy is expanding or contracting.
It’s considered an excellent predictor of how local industries will perform in the near-term future.
The number has been in negative territory for 19 months now.
It stayed there in July, as the previously strong health care sector showed flatlining employment, purchasing and lead times, or how long a production process takes to complete.
That could be a blip, and the health care sector could next month return to the same robust growth that characterized the last few years.
Or it could be a sign that health care is also subject to the vitality of the rest of the economy — employed people with great insurance plans are what pays the bills, after all, and they’ve been in shorter supply lately.
Ross Harvison, who conducts the business survey, thinks that the slowdown is more an indication that the industry is returning to normal rather than heading into a downturn.
“I think what we’re seeing within the medical area is that they’ve been expanding for a very, very long time, and eventually you do see things slow down,” he says.
“Right now, everything indicates that we’re heading for a soft landing.”