Most Iranian industries were on the path to growth during the second quarter of the current fiscal year (June 21-Sept. 21), according to the latest data on Industrial Production Index for large industrial units disclosed by Peyman Qorbani, a senior official with the Central Bank of Iran.
The three-month period saw IPI grow by 11.9% compared with the corresponding period of last year.
Noting that 70% of the added value of the industrial sector come from large industrial workshops with more than 100 workers, the official said, “The increase in Q2 Industrial Production Index resulted in a 6.8% growth of the index in the first half of the current year [March 20-Sept. 21].”
The central bank calculates IPI using data of large units with 100 workers or more operating in 24 industries.
According to the official, 21 out of 24 industries experienced positive growth in Q2.
“During the first quarter of the current fiscal year, 13 industries saw negative growth and 16 groups registered contractions in Q2 of last year,” Qorbani was quoted as saying by the news portal of the CBI.
IPI is an economic indicator measuring real output in various industries, with industrial production and capacity levels expressed as an index level relative to a base year, which the CBI considers to be the fiscal 2015-16, standing at 100.
In other words, the index does not express absolute production volumes or values, but the percentage change in production relative to that year.
Growth in Output of 17 Industrial Products
The Ministry of Industries, Mining and Trade's latest report reviewing the first seven months of the current Iranian year (March 20-Oct. 21) shows that production of 17 industrial products (out of 29 under review) saw growth during the period compared with the similar period of the year before.
A total of 2,600 tons of acrylic fiber were produced during the period, indicating a 243.7% rise compared with last year’s corresponding period.
Television production stood at 732,800 sets to register a year-on-year increase of 70.8%.
Production of washing machines rose by 55.8% to reach 559,900 machines.
A total of 347,000 combine harvesters were produced during the period under review, indicating a 42.8% YOY increase.
More than 155,600 tons of auto tires were produced over the seven months, indicating a 28.2% growth compared with last year’s similar period.
Synthetic fiber production rose by 25% YOY to stand at 154,800 tons.
The output of refrigerators and freezers went up by 24.3% to reach more than 1.16 million.
Production of pickup trucks totaled 46,797, up by 22.7% compared with the first seven months of last year.
The production of passenger vehicles reached 483,900, registering a 21.7% rise YOY.
That of carbon black amounted to a total of 79,400 tons, up 14.9% YOY; particle boards 467,300 cubic meters, up 14% YOY; industrial and motor oil stood at 381,600 tons, up 12.5% YOY; petrochemical products at 35.6 million tons, up 8.4% YOY; tractors at 11,273, up 4.6% YOY; medicines at 27.8 billion items, up 4.2% YOY; detergent powder at 371.800 tons, up 3.5% YOY; and fibers at 907,000 cubic meters, up 1.6% YOY.
PMI for Industries Below Threshold
The Purchasing Managers’ Index for industries in the eighth month of current fiscal year (Oct. 22-Nov. 20), settled at 47.63 from 52.22 in the preceding month (Sept. 22-Oct. 21), indicating a 4.59-point or an 8.79% decrease.
This is according to the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture’s latest report. The center is measuring PMI, known by its Farsi acronym Shamekh, in Iran for the past 26 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.
Industries categorized as “others” posted the highest PMI with a reading of 58 while “clothing and leather” registered the lowest PMI reading with 41.6.
The “production” sub-index for Iran’s industrial sector decreased from 56.17 in the sixth month (Aug. 22-Sept. 21) to 52.16 in the seventh month (Sept. 22-Oct. 21) to 47.94 in the eighth month (Oct. 22-Nov. 20).
Industries classified as “others” recorded the highest PMI of the production sub-index (70) while food industries registered the lowest PMI with a reading of 40.3.
The “new orders” sub-index declined from 57.48 in the month ending Sept. 21 to 55.42 in the month ending Oct. 21 to 44.02 in the month ending Nov. 20, with the top performing industries being “rubber and plastic” (64.3) and worst being “clothing and leather” (31.8%).
The “supplier deliveries” sub-index, which measures how fast deliveries are made, slid from 56.72 in the month ending Sept. 21 to 54.66 in the month ending Sept. 21 but improved to 55.32 in the month ending Nov. 20.
The highest supplier deliveries PMI was posted by industries categorized as “others” with a reading of 70 and the lowest was recorded for “wood, paper and furniture industries” with a reading of 43.3.
The “raw material inventory” sub-index slid from 41.01 in the month ending Sept. 21 to 37.46 in the month ending Oct. 21 but rebounded to 42.49 in the month ending Nov. 20.
“Wood, paper and furniture industries” posted the highest PMI (53.3) while industries classified as “others” registered the lowest PMI reading of 20 among all groups.
The PMI reading of “employment” sub-index fell below the threshold. It decreased from 53.17 in the month ending Sept. 21 to 53.08 in the month ending Oct. 21 to 49.43 in the month ending Nov. 20.
Industries categorized as “others” posted the highest employment PMI reading (80) whereas “wood, paper and furniture industries” and “non-metallic mineral industries” posted the lowest PMI of the sub-index (44.4).
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 93.08 in the month ending Sept. 21 to 94.82 in the month ending Oct. 21, but dropped to 79.90 in the month ending Nov. 20.
All 12 groups registered PMI readings of higher than 50 for “raw material purchase price” sub-index in the seventh fiscal month. The highest PMI was recorded for industries categorized as “others” with a reading of 100 and the lowest for “metal industries” with 68.4.
The “warehouse inventory” sub-index shrank from 49.13 in the month leading to Sept. 21 to 45.20 in the month leading to Oct. 21, but expanded to 55.60 in the month ending Nov. 20.
The highest PMI reading for “warehouse inventory” sub-index was registered for “metal industries” with 65.3 and the lowest PMI reading was recorded for “clothing and leather” with 31.8.
The “exports” sub-index fell from 47.44 in the month ending Sept. 21 to 47.03 in the month ending Oct. 21 to 45.50 in the month ending Nov. 20.
PMI reading of “exports” sub-index was the highest for industries categorized as “others” and “wood, paper and furniture industries” (50) and the lowest for “petroleum and gas products” (38.6).
The “prices of manufactured products” sub-index increased from 70.80 in the month ending Sept. 21 to 74.81 in the month ending Oct. 21, but plunged to 62.12 in the month leading to Nov. 20.
“Petroleum and gas products industries” recorded the highest PMI of 75 for the prices of “manufactured products” sub-index during the eighth month of the Iranian year while “textile industries” posted the lowest PMI reading of 45.
The “fuel consumption” sub-index climbed from 53.79 in the month ending Sept. 21 to 56.69 in the month ending Oct. 21, but slid to 56.59 in the month leading to Nov. 20.
Industries categorized as “others” registered the highest PMI measured for “fuel consumption” (80) while “textile industries” registered the lowest (40).
The “sales” sub-index plummeted from 55.38 in the month ending Sept. 21 to 49.98 in the month ending Oct. 21 to 43.03 in the month ending Nov. 20.
“Rubber and plastic industries” posted the highest sales PMI with a reading of 57.1 while “clothing and leather industries” registered the lowest PMI with a reading of 31.8.
The “production forecasts for the following month” sub-index improved from 52.28 in the month ending Sept. 21 to 57.36 in the month ending Oct. 21, but dropped to 51.59 in the month ending Nov. 20.
Seven groups reported PMI reading above 50 for “production forecasts for the following month” sub-index with “non-metallic mineral industries” registering the highest PMI reading of 72.2 and “clothing and leather” the lowest PMI reading of 31.8.
The overall PMI for industries decreased from 54.53 in the month leading to Sept. 21 to 52.22 in the month ending Oct. 21 to 47.63 in the month ending Nov. 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.
