The Purchasing Managers’ Index for Iranian industries has edged above the threshold.
The index for the current fiscal year’s sixth month (Aug. 23-Sept. 22) settled at 57.66 from 45.24 in the preceding month (July 23-Aug. 22), indicating a 27.45% increase as reported by the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture.
The PMI is locally known by its Farsi acronym Shamekh.
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 when compared with the previous month. A PMI reading under 50 represents a contraction and a reading at 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, no changes or deteriorating.
"Wood, paper and furniture industries" posted the highest PMI with a reading of 65.75 during the month under review while "clothing and leather" registered the lowest PMI at 45.
Five Main Sub-Indices
The "production" sub-index for Iran’s industrial sector decreased from 41.56 in the current fiscal year’s fourth month (June 22-July 22) to 40.26 in the fifth month (July 23-Aug. 22) but increased to 61.96 in the sixth month.
Industries classified as "wood, paper and furniture" recorded the highest PMI of the "production" sector (75) while "textile industries" registered the lowest PMI with a reading of 43.75.
The "new orders" sub-index increased from 37.44 in the month ending July 22 to 41.41 in the month ending Aug. 22 and grew to 58.85 in the month ending Sept. 22, with the top performing industries being "petroleum and gas products industries" (72.73) and the worst being "clothing and leather" (43.75).
The "supplier deliveries" sub-index, which measures how fast deliveries are made, increased from 51.84 in the month ending July 22 to 55.54 in the month ending Aug. 22 and grew to 59.49 in the month ending Sept. 22.
The highest supplier deliveries PMI was posted by "machine manufacturers and home appliances" with a reading of 72.73 and the lowest was recorded for "rubber and plastic" with a reading of 35.71.
The "raw material inventory" sub-index dropped from 42.58 in the month ending July 22 to 42.18 in the month ending Aug. 22 but grew to 48.75 in the month ending Sept. 22.
"Wood, paper and furniture" posted the highest PMI (60) while "clothing and leather" registered the lowest PMI reading of 18.75 among all groups.
The PMI reading of "employment" sub-index broke above the threshold. It increased from 47.68 in the month ending July 22 to 51.02 in the month ending Aug. 22 and grew to 53.46 in the month ending Sept. 22.
Industries classified as "others" posted the highest PMI reading (66.67) whereas non-metallic mineral industries posted the lowest PMI (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 increased from 79.42 in the month ending July 22 to 82.53 in the month ending Aug. 22 but declined to 79.73 in the month ending Sept. 22.
All 12 groups registered PMI readings of higher than 50 for "raw material purchase price" sub-index in the sixth fiscal month. The highest PMI was recorded for "chemical industries" with a reading of 91.67 and the lowest for industries categorized as "non-metallic mineral industries" with 71.43.
The "warehouse inventory" sub-index increased from 48.44 in the month ending July 22 to 51.26 in the month ending Aug. 22, but declined to 50.07 in the month ending Sept. 22.
The lowest PMI reading for "warehouse inventory" sub-index was recorded for "others" with 33.33 and the highest was registered for "textile industries" with 55.17.
The "exports" sub-index declined from 45.31 in the month ending July 22 to 44.32 in the month ending Aug. 22 but grew to 51.36 in the month ending Sept. 22.
PMI reading of "exports" sub-index was the highest for "non-metallic mineral industries" (64.29) and the lowest for industries categorized as "clothing and leather" (25).
The "prices of manufactured products" sub-index increased from 55.95 in the month ending July 22 to 60.01 in the month ending Aug. 22, but decreased to 56.07 in the month ending Sept. 22.
"Petroleum and gas products industries" recorded the highest PMI of 81.83 during the sixth month of the Iranian year while industries classified as "non-metallic mineral industries" posted the lowest PMI reading of 28.57.
The "fuel consumption" sub-index grew from 46.42 in the month ending July 22 to 46.44 in the month ending Aug. 22 and increased to 59.32 in the month ending Sept. 22.
Industries categorized as "others" registered the highest PMI measured for "fuel consumption" last month (75) while "rubber and plastic", “clothing and leather” and “textile industries” registered the lowest (50).
The "sales" sub-index increased from 35.25 in the fourth month of the current year to 38.22 in the fifth month and climbed to 58.19 in the sixth fiscal month.
"Wood, paper and furniture" posted the highest sales PMI with a reading of 70 and metallic industries registered the lowest PMI with a reading of 46.43.
The "production forecasts for the following month" sub-index increased from 54.20 in the month ending July 22 to 65.98 in the month ending Aug. 22, but decreased to 63.83 in the month ending Sept. 22.
Eleven groups reported PMI reading above 50 for "production forecasts for the following month" sub-index with "vehicle and auto parts manufacturing industries" registering the highest PMI reading of 85 and "clothing and leather" the lowest PMI reading of 37.5.
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.
