The Purchasing Managers’ Index for industries during the ninth month of the current fiscal year (Nov. 21-Dec. 20) settled at 49.30 from 47.63 in the preceding month (Oct. 22-Nov. 20), indicating a 1.67-point or a 3.51% increase.
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 27 months.
An indicator of economic health for manufacturing and services sectors, PMI 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.
“Rubber and plastic industries” posted the highest PMI with a reading of 57.8 during the month under review while “clothing and leather” registered the lowest PMI reading with 32.5.
Five Main Sub-Indices
The “production” sub-index for Iran’s industrial sector decreased from 52.16 in the seventh month (Sept. 22-Oct. 21) to 47.94 in the eighth month (Oct. 22-Nov. 20) but increased to 50.75 in the ninth month (Nov. 21-Dec. 20).
Industries categorized as “others” recorded the highest PMI of the production sub-index with a reading of 66.7 while “clothing and leather” registered the lowest PMI with a reading of 27.3.
The “new orders” sub-index declined from 55.42 in the month ending Oct. 21 to 44.02 in the month ending Nov. 20 to 43.51 in the month ending Dec. 20, with the top performing industries being “wood, paper and furniture” (60) and worst being “clothing and leather” (22.7%).
The “supplier deliveries” sub-index, which measures how fast deliveries are made, improved from 54.66 in the month ending Oct. 21 to 55.32 in the month ending Nov. 20 to 56.43 in the month ending Dec. 20.
The highest “supplier deliveries” PMI was posted by “textile industries” with a reading of 72.2 and the lowest was recorded for “clothing and leather industries” with a reading of 40.9.
The “raw material inventory” sub-index grew from 37.46 in the month ending Oct. 21 to 42.49 in the month ending Nov. 20 to 48.92 in the month ending Dec. 20.
“Wood, paper and furniture industries” and industries categorized as “others” posted the highest PMI (66.7) for the “raw material inventory” sub-index while “petroleum and gas products industries” registered the lowest PMI reading of 32.7 among all groups.
The PMI reading of “employment” sub-index stood above the threshold. It decreased from 53.08 in the month ending Oct. 21 to 49.43 in the month ending Nov. 20, but rebounded to 51 in the month ending Dec. 20.
“Rubber and plastic industries” and “textile industries” posted the highest “employment” PMI reading (61.1) whereas “machinery and home appliances” posted the lowest PMI (40.5).
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 94.82 in the month ending Oct. 21 to 79.90 in the month ending Nov. 20, but increased to 79.96 in the month ending Dec. 20.
All 12 groups registered PMI readings of higher than 50 for “raw material purchase price” sub-index in the ninth fiscal month. The highest PMI was recorded for industries categorized as “others” with a reading of 100 and the lowest for “machinery and home appliances industries” with 52.4.
The “warehouse inventory” sub-index improved from 45.20 in the month leading to Oct. 21 to 55.60 in the month ending Nov. 20 to 57.17 in the month ending Dec. 20.
The highest PMI reading for “warehouse inventory” sub-index was registered for “machinery and home appliances” with 69 and the lowest PMI reading was recorded for “petroleum and gas products” with 40.4.
The “exports” sub-index fell from 47.03 in the month ending Oct. 21 to 45.50 in the month ending Nov. 20, but climbed to 48.29 in the month ending Dec. 20.
The PMI reading of “exports” sub-index was the highest for “rubber and plastic industries” (61.1) and the lowest for “petroleum and gas products” (28.8).
The “prices of manufactured products” sub-index decreased from 74.81 in the month ending Oct. 21 to 62.12 in the month ending Nov. 20 to 56.62 in the month ending Dec. 20.
“Petroleum and gas products industries” recorded the highest PMI of 76.9 for the “prices of manufactured products” sub-index during the ninth month of the Iranian year while “machinery and home appliances industries” posted the lowest PMI reading of 31.
The “fuel consumption” sub-index dropped from 56.69 in the month ending Oct. 21 to 56.59 in the month leading to Nov. 20, but increased to 58.39 in the month ending Dec. 20.
Industries categorized as “others” registered the highest PMI measured for “fuel consumption” (83.3) while “clothing and leather industries” registered the lowest (45.5).
The “sales” sub-index slid from 49.98 in the month ending Oct. 21 to 43.03 in the month ending Nov. 20, but jumped to 44.24 in the month ending Dec. 20.
“Rubber and plastic industries” posted the highest sales PMI with a reading of 66.7 while “clothing and leather industries” registered the lowest PMI with a reading of 18.2.
The sub-index called “production forecasts for the following month” fell from 57.36 in the month ending Oct. 21 to 51.59 in the month ending Dec. 20, but surged to 58.22 in the month ending Dec. 20.
Ten groups reported PMI reading above 50 for “production forecasts for the following month” sub-index with “machinery and home appliances industries” registering the highest PMI reading of 69 and “non-metal mineral industries” the lowest PMI reading of 46.4.
The overall PMI for industries decreased from 52.22 in the month ending Oct. 21 to 47.63 in the month ending Nov. 20, but improved to 49.30 in the month ending Dec. 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 the percentage of answers reporting no change and P3 is the percentage of answers reporting a deterioration.
