The Purchasing Managers’ Index for the industrial sector during the fifth month of the current fiscal year (July 22-Aug. 21) settled at 48.06 from 55.25 in the preceding month (June 21-July 21), indicating a 13% decrease.
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 23 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 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.
Non-ferrous mineral industries posted the highest PMI with a reading of 53.9 for the month under review while textile industries registered the lowest PMI reading with 43.6.
Five Main Sub-Indices
The "production" sub-index for Iran’s industrial sector decreased from 58.69 in the third month of the year (May 21-June 20) to 56.47 in the fourth month (June 21-July 21) to 46.23 in the fifth month (July 22-Aug. 21).
Textile industries recorded the highest PMI of the production sub-index for the period under review (55.6) while industries categorized as "others" registered the lowest PMI with a reading of 25.
The "new orders" sub-index fell from 59.62 in the month ending June 20 to 58.85 in the month ending July 21 to 44.23 in the month ending Aug. 21, with the top performing industries categorized as others (75) and the worst being textile industries (33.3).
The "supplier deliveries" sub-index, which measures how fast deliveries are made, decreased from 58.53 in the month ending June 20 to 54.85 in the month ending July 21 improved to 55.49 in the month ending Aug. 21.
The highest "supplier deliveries" PMI was posted by clothing and leather industries with a reading of 72.7 and the lowest was recorded for machinery and household appliances with a reading of 45.3.
The "raw material inventory" sub-index dropped from 42.96 in the month ending June 20 to 39.53 in the month ending July 21 but increased to 43.09 in the month ending Aug. 21.
Metal industries posted the highest PMI (50) while industries classified as “others” registered the lowest PMI reading of 25 among all groups.
The PMI reading of "employment" sub-index was above the threshold last month. It rose from 55.81 in the month ending June 20 to 56.49 in the month ending July 21 but dropped to 52.98 in the month ending Aug. 21.
Clothing and leather industries posted the highest PMI reading (63.6) whereas industries classified as “others” posted the lowest PMI of employment sub-index (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 92.91 in the month ending June 20 to 94.74 in the month ending July 21 but slid to 88.63 in the month ending Aug. 21.
All 12 groups registered PMI readings of higher than 50 for "raw material purchase price" sub-index in the fifth fiscal month. The highest PMI was recorded for wood, paper and furniture industries with a reading of 97.4 and the lowest for industries categorized as “others” with 75.
The "warehouse inventory" sub-index decreased from 46.75 in the month ending June 20 to 44.27 in the month ending July 21 but rebounded to 51.28 in the month ending Aug. 21.
The highest PMI reading for "warehouse inventory" sub-index was registered for non-ferrous minerals with 60.7 for and the lowest PMI reading was recorded for industries categorized as “others” with 25.
The "exports" sub-index rose from 47.30 in the month ending June 20 to 49.45 in the month ending July 21, but sank to 46.32 in the month ending Aug. 21.
PMI reading of "exports" sub-index was the highest for textile industries (61.1) and the lowest for petroleum and gas products industries (37.5).
The "prices of manufactured products" sub-index increased from 72.43 in the month ending June 20 to 76.16 in the month ending July 21 but decreased to 66.01 in the month ending Aug. 21.
“Wood, paper and furniture” recorded the highest PMI of 81.6 during the fifth month of the Iranian year while industries classified as “others” posted the lowest PMI reading of 50.
The "fuel consumption" sub-index surged from 58.95 in the month ending June 20 to 61.83 in the month ending July 21 but declined to 53 in the month ending Aug. 21.
Industries categorized as “others” registered the highest PMI measured for fuel consumption last month (75) while petroleum and gas products industries registered the lowest (39.3).
The "sales" sub-index improved from 54.11 in the third month to 57.28 in the fourth fiscal month but dropped to 44.97 in the fifth fiscal month.
Industries classified as “others” posted the highest sales PMI with a reading of 75 while petroleum and gas products industries registered the lowest PMI with a reading of 30.4.
The "production forecasts for the following month" sub-index fell from 60.86 in the month ending June 20 to 51.37 in the month ending July 21 but improved to 58.62 in the month ending Aug. 21.
Seven groups reported PMI reading above 50 for "production forecasts for the following month’s sub-index with vehicle and auto parts manufacturing industries registering the highest PMI reading of 70.3 and textile industries the lowest PMI reading of 38.9.
The overall PMI for industries decreased from 56.80 in the month ending June 20 to 55.25 in the month ending July 21 to 48.06 in the month leading to Aug. 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 the percentage of answers reporting an improvement, P2 is percentage of answers reporting no change and P3 is percentage of answers reporting a deterioration.
