The Purchasing Managers' Index for the eighth month of the current fiscal year (Oct. 23-Nov. 21) settled at 51.13 from 50.97 in the preceding month (Sept. 23-Oct. 22), indicating a 0.7-point or 1.38% increase month-on-month, the Statistics and Economic Analysis Center of the Iran Chamber of Commerce, Industries, Mines and Agriculture has announced.
The center is measuring PMI, known by its Farsi acronym “Shamekh”, in Iran for the past 14 months.
PMI is an indicator of economic health for manufacturing and services sectors. It aims to provide information about current business conditions to company 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 level (10%), production (25%), supplier deliveries (15%) and employment (20%).
The surveys pose 12 questions about business conditions and any changes, whether it is improving, no changes or deteriorating.
At present, ICCIMA publishes reports only on Iran’s industrial sector and its 12 subsectors. It plans to survey all the economic sectors of Iran in the near future.
“Clothing and leather” industry posted the highest PMI with a reading of 59.4 during the month under review while “food industries” registered the lowest PMI reading with 44.7.
Five Main Sub-Indices
The "production" sub-index for Iran’s industrial sector decreased from 50.03 in the sixth fiscal month that ended on Sep. 22 to 49.29 in the seventh Iranian month (Sept. 23-Oct. 22) but rebounded to 49.6 last month (Oct. 23-Nov. 21).
Those categorized under “other industries” recorded the lowest PMI of the “production” sub-index last month (35.7) while “clothing and leather” registered the highest PMI with a reading of 61.5.
The “new orders” sub-index increased from 45.32 in the previous month to 48.97 in the eighth month with the top performing industry for the eighth fiscal month being “oil and gas industries” (59.6).
The “supplier deliveries” sub-index, which measures how fast deliveries are made, increased from 59.3 in the sixth month to 60.65 in the seventh month but relapsed to 59.38 in the eighth month.
The highest “supplier deliveries” PMI was posted by “non-metallic mineral industries” with a reading of 67.5 and the lowest was recorded for “other industries” with a reading of 42.9.
The “raw material inventory level” sub-index increased from 46.42 in the month ending Sept. 22 to 48.87 in the month leading to Oct. 22 but slid to 43.58 in the month ending Nov. 21.
Nine out of 12 industries posted PMI readings below 50 for “raw material inventory level” in the eighth month of the current Iranian year. “Vehicle and auto parts manufacturing” registered the lowest PMI (38.7) among all groups while “textile industries” posted the highest PMI (59.4).
The PMI reading of “employment” sub-index once again stuck above the threshold last month. However, it fell to 53.86 in the eighth month from 55.36 in the seventh month.
“Clothing and leather” industry registered the highest PMI (69.2) whereas “other industries” posted the lowest PMI (42.9).
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 decreased from 52.32 in the month ending Sept. 22 to 46.92 in the month ending Oct. 22, but jumped to 63.79 in the month ending Nov. 21.
Eleven groups registered PMI readings of higher than 50 for “raw material purchase price” sub-index in the eighth fiscal month: The highest PMI was recorded for “non-metallic mineral industries” with a reading of 75.
The “warehouse inventory level” sub-index decreased from 58.03 in the month ending Sept. 22 to 56.77 in the month ending Oct. 22 to 51.94 in the month ending Nov. 21.
The lowest PMI sub-index was recorded for “other industries” (42.9) and the highest was registered for “food industries” with 59.8.
The “exports” sub-index increased from 45.99 in the month ending Sept. 22 to 46.06 in the month ending Oct. 22 to 46.27 last month.
The overall PMI for industries improved from 50.43 in the month ending Sept. 22 to 50.97 in the month ending Oct. 22 to 51.13 in the month ending Nov. 21.
PMI reading of exports sub-index was the lowest for “rubber and plastic industries” (41.7) and highest for “non-metallic mineral industries” (55).
The “prices of manufactured products” sub-index decreased from 40.95 in the sixth month to 40.59 in the seventh month but increased to 45.13 in the eighth month.
“Wood, paper and furniture” recorded the lowest PMI of 36.8 during the eighth month of the Iranian year.
The “fuel consumption” sub-index grew from 51.01 in the month ending Sept. 22 to 52.19 in the month ending Oct. 22 to 58.91 in the month ending Nov. 21. “Other industries” registered the highest PMI measured for fuel consumption last month (71.4).
The “sales” sub-index fell from 46.14 in the sixth month to 44.02 in the seventh month but improved to 45.93 last month. “Clothing and leather” posted the highest PMI with a reading of 57.7 and those categorized as “other industries” registered the lowest PMI with a reading of 28.6.
“Production forecasts for the following month” sub-index decreased from 65.23 in the month ending Sept. 22 to 62.32 in the month ending Oct. 22 to 59.71 in the month ending Nov. 21.
Among the 12 groups, “wood, paper and furniture” registered the highest PMI reading of 73.7 in the eighth fiscal month while “other industries” recorded the lowest PMI reading of 42.9.
The overall PMI for industries improved from 50.43 in the month ending Sept. 22 to 50.97 in the month ending Oct. 22 to 51.13 in the month ending Nov. 21.
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 percentage of answers reporting an improvement, P2 is percentage of answers reporting no change and P3 is percentage of answers reporting a deterioration.
ICC's 1st PMI Report for Housing Sector
Iran Chamber of Cooperatives recently measured PMI for the housing sector in Iran for the first time.
According to Ali Moti’-Jahani, deputy for Support, Research and Planning Department of ICC, the new report shows that the housing PMI for the month ending Oct. 22 stood at 44.30.
Results published by Mehr News Agency quoting Moti’-Jahani show that PMI for the performance sub-index, including production and supply, which is the subsector with the biggest impact on the index, stood at 44.30.
New orders sub-index stood at 46.20, supplier deliveries sub-index that measures how fast deliveries are made 52.53, raw materials inventory sub-index settled at 41.77 and employment sub-index stood at 50.63.
To calculate housing PMI, seven secondary criteria were also surveyed by ICC, including raw material purchase prices that stood at 60.76, warehouse inventory 42.41, exports 49.37, prices of products 45.57, fuel consumption 50.63, sales 47.47 and performance expectations for the following month sub-index settled at 61.39 in the month ending Oct. 22.
