The Purchasing Managers' Index for the 12th month of last fiscal year (Feb. 20-March 19) settled at 42.48 from 56.14 in the preceding month (Jan. 21-Feb. 19), indicating a 13.66-point or 32.15% decrease month-on-month.
The announcement was made by the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture.
The center is measuring PMI, known by its Farsi acronym Shamekh, in Iran for the past 18 months.
PMI is an indicator of economic health for manufacturing and services sectors. It provides information about current business conditions to companies’ decision-makers, analysts and purchasing managers.
The headline PMI is a number from 0 to 100, such that over 50 represents an expansion when compared with the previous month. A PMI reading under 50 indicates contraction and a reading of 50 implies no change.
PMI is based on a monthly survey sent to senior executives of more than 400 companies. It is based on five major survey areas: new orders (30%), raw material inventory (10%), production (25%), supplier deliveries (15%) and employment (20%).
The survey poses 12 questions about business conditions and any changes, whether it is improving, no changes or deteriorating.
Wood, paper and furniture industry posted the highest PMI with a reading of 59.9 during the month under review while textile industries registered the lowest PMI reading with 23.8. In fact, only two groups posted PMI reading above the threshold level: wood, paper and furniture and those classified under “other industries”.
Five Main Sub-Indices
The production sub-index for Iran’s industrial sector increased from 51.27 in the 10th fiscal month (Dec. 22, 2019-Jan. 20) to 55.35 in 11th fiscal month (Jan. 21-Feb. 19) but fell to 39.09 in the 12th fiscal month (Feb. 20-March 19).
Gas and petroleum products industries recorded the lowest PMI of the production sub-index last month (20) while wood, paper and furniture registered the highest PMI with a reading of 61.1.
The new orders sub-index increased from 50.49 in the month ending Jan. 20 to 60.12 in the month ending Feb. 19, but dropped to 41.43 in the month leading to March 19, with the top performing industries being those categorized as “other industries” (83.3).
The supplier deliveries sub-index, which measures how fast deliveries are made, increased from 57.26 in the month ending Jan. 20 to 62.15 in the month ending Feb. 19 but dropped to 50.54 in the month ending March 19.
The highest supplier deliveries PMI was posted by clothing and leather with a reading of 72.2 and the lowest was recorded for textile industries with a reading of 25.
The raw material inventory sub-index declined from 46.22 in the month ending Jan. 20 to 42.39 in the month ending Feb. 19 to 41.01 in the month ending March 19.
All 12 industries posted PMI readings below 50 for raw material inventory in the 12th month of the last Iranian year. “Other industries” registered the lowest PMI (16.7) among all groups while machinery and home appliances posted the highest PMI (48.1).
The PMI reading of employment sub-index fell below the threshold last month. It fell from 53.74 in the month ending Jan. 20 to 53.54 in the month ending Feb. 19 to 43.02 in the month ending March 19.
Clothing and leather, and “other industries” registered the highest PMI readings (50) whereas textile industries posted the lowest PMI (25).
Seven Secondary Criteria
To calculate PMI, seven secondary criteria were also surveyed by the center, namely raw materials purchase prices, warehouse inventory, exports, product price, fuel consumption, sales and production expectations.
The raw materials purchase prices sub-index increased from 77.55 in the month ending Jan. 20 to 85.06 in the month ending Feb. 19, but dropped to 75.99 in the month ending March 19.
All groups registered PMI readings of higher than 50 for raw material purchase price sub-index in the 12th fiscal month: The highest PMI was recorded for “other industries” with a reading of 100.
The warehouse inventory sub-index decreased from 49.67 in the month ending Jan. 20 to 45.14 in the month ending Feb. 19 to 44.43 in the month ending March 19.
The lowest PMI sub-index was recorded for machinery and home appliances (29.6) and the highest was registered for clothing and leather with 61.1.
The exports sub-index increased from 44.93 in the month ending Jan. 20 to 47.78 in the month ending Feb. 19, but tumbled to 39 in the month ending March 19.
PMI reading of exports sub-index was the lowest for food industries (28.4) and highest for “other industries” (50).
The prices of manufactured products sub-index improved from 55.22 in the month ending Jan. 20 to 58.54 in the month ending Feb. 19, but slid to 55.32 in the month ending March 19.
Machinery and home appliances recorded the highest PMI of 70.4 during the 12th month of the Iranian year while gas and petroleum products posted the lowest PMI reading of 39.5.
The fuel consumption sub-index dropped from 61.49 in the month ending Jan. 19 to 59.49 in the month ending Feb. 19 to 42.83 in the leading to March 19.
Wood, paper and furniture registered the highest PMI measured for fuel consumption last month (55.6) and vehicle and auto parts manufacturing industry registered the lowest (29.5).
The sales sub-index increased from 50.62 in the 10th fiscal month to 57.80 in the 11th fiscal month, but declined to 40.96 in the 12th fiscal month.
“Other industries” posted the highest PMI with a reading of 83.3 and textile industries registered the lowest PMI with a reading of 20.
Production forecasts for the following month’s sub-index plummeted from 65.73 in the month ending Jan. 20 to 53.38 in the month ending Feb. 19 to 27.52 in the month ending March 19.
All 12 groups reported PMI reading below 50 for production forecasts for the following month’s sub-index with clothing and leather registering the lowest PMI reading of 5.6 and food industries the highest PMI reading of 37.8.
The overall PMI for industries improved from 51.92 in the month ending Jan. 20 to 56.14 in the month ending Feb. 19, but sank to 42.48 in the month ending March 19.
PMI, among the most precise indicators showcasing a country’s economic condition, was first devised by the Institute for Supply Management in the United States in 1948. It is calculated as (P1 * 1) + (P2 * 0.5) + (P3 * 0) where P1 is the percentage of answers reporting an improvement, P2 is percentage of answers reporting no change and P3 is percentage of answers reporting a deterioration.
