The overall Purchasing Managers’ Index, known by its Farsi acronym Shamekh, for Iran’s economy settled at 39.65 in the month ending April 20 from 54.73 in the month ending March 20, indicating a 15.08-point or 27.55% decline.
A report by the Statistics and Economic Analysis Center of the Iran Chamber of Commerce, Industries, Mines and Agriculture – the sponsor and coordinator of the survey, says the index hit a 12-month low due to Norouz, the Persian New Year holidays, and the fourth wave of Covid-19 pandemic in Iran.
The headline PMI is a number from 0 to 100, such that over 50 shows an expansion of the economy when compared with the previous month. A PMI reading under 50 indicates contraction and a reading of 50 implies no change.
PMI is an index of the prevailing direction of economic trends, aiming to provide information about business conditions to company directors, analysts and purchasing managers.
According to the report, the “business output” sub-index increased from 56.71 in the 11th month (Jan. 20-Feb. 18) to 58.39 in the 12th month (Feb. 19-March 20) of last year, but plunged to 36.15 in the first month of the current year (March 21-April 20).
The index hit a 12-month low due to Norouz, the Persian New Year holidays, and the fourth wave of Covid-19 pandemic in Iran
The “new orders” sub-index jumped from 53.43 in the 11th month to 55.52 in the 12th month, but fell to 31.53 in the first month.
The “supplier deliveries” sub-index, which measures how fast deliveries are made, increased from 57.99 in the month ending Feb. 18 to 59.67 in the month ending March 20, but decreased to 46.92 in the month ending April 20.
The “raw materials” inventory sub-index decreased from 48.26 in the month ending Feb. 18 to 46.87 in the month ending March 20 and to 41.86 in the month ending April 20.
The PMI reading of “employment” sub-index dropped from 49.99 in the month ending Feb. 18 to 49.17 in the month ending March 20, but rebounded to 49.62 in the month ending April 20.
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 slid from 79.72 in the month ending Feb. 18 to 78.56 in the month ending March 20, but rose to 81.86 in the month ending April 20.
The “warehouse inventory” sub-index fell from 49.29 in the month ending Feb. 18 to 47.01 in the month ending March 20, but improved to 48.7 in the month ending April 20.
The “exports” sub-index rose from 47.56 in the 11th month to 47.80 in the 12th month, but fell to 41.31 in the first month.
The “prices of manufactured products or services” sub-index increased from 58.12 in the month ending Feb. 18 to 59.12 in the month ending March 20 and to 65.73 in the month ending April 20.
The “fuel consumption” sub-index jumped from 54.72 in the month ending Feb. 18 to 57.88 in the month ending March 20, but sank to 38.46 in the month ending April 20.
The “sales” sub-index improved from 53.72 in the month ending Feb. 18 to 60.30 in the month ending March 20, but plummeted to 31.43 in the month ending April 20.
The sub-index entitled “business output forecasts for the following month” dropped from 58.92 in the month ending Feb. 18 to 44.57 in the month ending March 20, but surged to 62.98 in the month ending April 20.
The overall PMI increased from 53.73 in the month ending Feb. 18 to 54.73 in the month ending March 20, but dropped to 39.65 in the month ending April 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.
