New data released by the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture show the Purchasing Managers' Index for local industries has rallied for the second consecutive month.
The index settled at 59.51 in last Iranian year’s 12th month (Feb. 20-March 20), up from 57.39 in the preceding month (Jan. 21-Feb. 19).
PMI is an indicator of the economic health of 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, under 50 indicates a contraction and a reading of 50 shows no change compared with the previous month. 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.
“Non-Metallic Mineral Industries" posted the highest PMI with a reading of 75 while “Clothing and Leather” registered the lowest of 48.1.
According to ICCIMA, most industrial activities see a boost in the index in the final month of the Iranian year.
“Business owners believe the sharp devaluation of the national currency and the rise in production costs, in addition to constant inexpert changes made in rules and regulations by the Ministry of Industries, Mining and Trade, the Islamic Republic of Iran Customs Administration and the Central Bank of Iran have hard hit many companies,” it said.
Main Indices
The "Production" index for Iran’s industrial sector increased from 39.63 in the 10th fiscal month (Dec. 22, 2022-Jan. 20) to 58.73 in the 11th month of the year (Jan. 21-Feb. 19) and to 63.46 in the 12th month.
“Non-Metallic Mineral Industries” recorded the highest PMI of the production sector with 79.2 while “Clothing and Leather” registered the lowest PMI with 43.8.
The "New Orders" index grew from 44.19 in the month ending Jan. 20 to 63.14 in the month ending Feb. 19, but declined to 62.14 in the month ending March 20, with top performers being “Rubber and Plastic” (95) and the worst being "Clothing and Leather” (37.5).
The "Supplier Deliveries" index, which measures how fast deliveries are made, increased from 53.09 in the month ending Jan. 20 to 57.84 in the month ending Feb. 19 and to 65.53 in the month ending March 20.
The highest “Supplier Deliveries” PMI was posted by "Wood, Paper and Furniture" with 81.8 and the lowest was recorded for “Clothing and Leather” with 56.3.
The "Raw Material Inventory" index increased from 43.31 in the month ending Jan. 20 to 43.99 in the month ending Feb. 19 and to 50.25 in the month ending March 20.
"Wood, Paper and Furniture” posted the highest PMI with 68.2 while “Textile Industries” registered the lowest PMI of 27.8 among all groups.
PMI for the "Employment" index grew from 50.71 in the month ending Jan. 20 to 53.45 in the month ending Feb. 19, but declined to 50.73 in the month ending March 20.
"Rubber and Plastic” posted the highest PMI (65) whereas "Textile Industries" posted the lowest PMI (33.3).
Secondary Indices
To calculate PMI, seven secondary criteria were also surveyed by the center, namely "Raw Material Purchase Prices", "Warehouse Inventory", "Exports", "Product Price", "Fuel Consumption", "Sales" and "Production Expectations".
The "Raw Material Purchase Prices" sub-index increased from 87.66 in the month ending Jan. 20 to 89.81 in the month ending Feb. 19, but declined to 86.97 in the month ending March 20. The highest PMI was recorded for “Textile Industries” and “Non-Metallic Mineral Industries” each with a reading of 100 and the lowest for “Rubber and Plastic” with 70.
The "Warehouse Inventory" sub-index decreased from 47.48 in the month ending Jan. 20 to 45.79 in the month ending Feb. 19 and 42.44 in the month ending March 20. The lowest PMI for "Warehouse Inventory" sub-index was recorded for “Machinery and Home Appliance Producers" with 26.3 and the highest was registered for “Vehicles and Related Parts” with 48.1.
The "Exports" sub-index increased from 44.67 in the month ending Jan. 20 to 49.46 in the month ending Feb. 19 and to 56.78 in the month ending March 20. PMI of the "Exports" sub-index was highest for “Non-Metallic Mineral Industries” (70.8) and lowest for "Clothing and Leather" (31.3).
The "Prices of Manufactured Products" sub-index increased from 62.46 in the month ending Jan. 20 to 66.98 in the month ending Feb. 19, but declined to 66.64 in the month ending March 20. "Clothing and Leather" recorded the highest PMI of 93.8 during the period while "Vehicles and Related Parts” posted the lowest PMI of 59.3.
The "Fuel Consumption" sub-index increased from 48.2 in the month ending Jan. 20 to 57.61 in the month ending Feb. 19, but decreased to 55.37 in the month ending March 20. Industries categorized as "Textile Industries” registered the highest PMI measured for "Fuel Consumption" (72.2) while “Clothing and Leather" registered the lowest (43.8).
The "Sales" sub-index grew from 37.4 in the 10th month of the current year to 58.63 in the 11th fiscal month and to 64.24 in the 12th month of the fiscal 2022-23. "Non-Metallic Mineral Industries” registered the highest PMI of 79.2 and "Clothing and Leather" the lowest PMI of 43.8.
The "Production Forecasts for the Following Month" sub-index decreased from 62.76 in the month ending Jan. 20 to 62.61 in the month ending Feb. 19 and to 40.34 in the month ending March 20."Non-Metallic Mineral Industries” registered the highest PMI of 75 and "Clothing and Leather" the lowest PMI of 18.8.
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.
