The Purchasing Managers’ Index for industries during the first month of the current fiscal year (March 21-April 20) settled at 37.28 from 57.29 in the preceding month (Feb. 19-March 20), indicating a 20.01-point or a 34.93% decrease.
The drop in the index reflects the seasonal slump caused by the new Iranian year holidays starting March 21 for a fortnight.
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 31 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. A PMI above 50 represents an expansion compared with the previous month. A PMI reading under 50 represents a contraction and a reading of 50 indicates no change. The further away from 50, the greater the level of 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 or deteriorating.
“Non-metal mineral industries” posted the highest PMI with a reading of 54.17 while industries categorized as “others” registered the lowest PMI reading with 17.
Five Main Sub-Indices
The “production” sub-index for Iran’s industrial sector fell from 59.58 in the 11th month (Jan. 20-Feb. 18) to 56.15 in the 12th month (Feb. 19-March 20) of last Iranian year to 28.40 in the first month of the current Iranian year (March 21-April 20).
“Non-metal mineral industries” recorded the highest PMI of production sub-index with a reading of 50 while industries categorized as “others” registered the lowest PMI with a reading of zero.
The “new orders” sub-index jumped from 60.03 in the month ending Feb. 18 to 62.18 in the month ending March 20, but plunged to 28.52 in the month ending April 20, with the top performing industries being “non-metal mineral industries” with 55.56 and worst being industries classified as “others” with zero.
The “supplier deliveries” sub-index, which measures how fast deliveries are made, slid from 63.79 in the month leading to Feb. 18 to 63.70 in the month ending March 20 to 43.78 in the month ending April 20.
The highest “supplier deliveries” PMI was posted by “non-metal mineral industries” with a reading of 55.56 and the lowest was recorded for the two groups of “clothing and leather” and industries categorized as “others” with a reading of 20.
The “raw material inventory” sub-index fell from 50.93 in the month ending Feb. 18 to 49.42 in the month ending March 20 to 43.01 in the month ending April 20.
“Non-metal mineral industries” posted the highest PMI (55.56) for the “raw material inventory” sub-index while industries categorized as “others” registered the lowest PMI reading of 20 among all groups.
The PMI reading of “employment” sub-index decreased from 53.89 in the month ending Feb. 18 to 50.48 in the month ending March 20, but rebounded to 53.78 in the month ending April 20.
“Clothing and leather” posted the highest employment PMI reading (65) whereas “textile industries” posted the lowest PMI of the sub-index (35.71).
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 jumped from 75.57 in the month ending Feb. 18 to 79.98 in the month ending March 20 to 82.64 in the month ending April 20.
All 12 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 “wood, paper, and furniture” with a reading of 96.43 and the lowest for petroleum and gas products with 60.42.
The “warehouse inventory” sub-index sank from 53.18 in the month ending Feb. 18 to 44.66 in the month ending March 20, but improved to 53.27 in the month ending April 20.
The highest PMI reading for “warehouse inventory” sub-index was registered for “textile industries” with 71.43 and the lowest PMI reading was recorded for industries categorized as “others” with 40.
The “exports” sub-index climbed from 50.48 in the month leading to Feb. 18 to 52.66 in the month ending March 20, but fell to 42.86 in the month ending April 20.
PMI reading of “exports” sub-index was the highest for three groups of “textile industries”, “non-metal mineral industries” and “wood, paper and furniture” (50) and the lowest for “petroleum and gas products” (27.08).
The “prices of manufactured products” sub-index increased from 55.87 in the month ending Feb. 18 to 56.45 in the month ending March 20 to 64.06 in the month ending April 20.
“Clothing and leather” recorded the highest PMI of 85 for the “prices of manufactured products” sub-index during the first month of the Iranian year while “petroleum and gas products” posted the lowest PMI reading of 47.92.
The “fuel consumption” sub-index decreased from 58.25 in the month ending Feb. 18 to 57.32 in the month ending March 20 to 33.96 in the month ending April 20.
“Non-metal mineral industries” registered the highest PMI measured for “fuel consumption” (50) while “textile industries” registered the lowest (14.29).
The “sales” sub-index improved from 57.12 in the month ending Feb. 18 to 64.18 in the month ending March 20, but plunged to 27.03 in the month ending April 20.
“Non-metal mineral industries” posted the highest sales PMI with a reading of 50 while “textile industries” registered the lowest PMI with a reading of zero.
The sub-index titled “production forecasts for the following month” decreased from 67.01 in the month ending Feb. 18 to 44.22 in the month ending March 20, but soared to 74.94 in the month ending April 20.
All groups reported a PMI reading of above 50 for “production forecasts for the following month” sub-index with “wood, paper and furniture” registering the highest PMI reading of 89.29 and “clothing and leather” the lowest PMI reading of 50.
The overall PMI for industries decreased from 58.34 in the month ending Feb. 18 to 57.29 in the month ending March 20 to 37.28 in the month ending April 20.
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.
