The overall Purchasing Managers’ Index, known by its Farsi acronym Shamekh, for Iran’s economy settled at 44.62 in the month ending July 22 from 51.27 in the month ending June 21, indicating a 6.65-point or 13% decline.
A new 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 resurgence of Covid-19, mandatory shutdowns, widespread power outages and low demand caused a sharp decline in PMI during the month under review.
The headline PMI is a number from 0 to 100, such that over 50 shows economic expansion 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 decreased from 58.64 in the second month of the current Iranian year (April 21-May 21) to 52.46 in the third month (May 22-June 21) to 44.93 in the fourth month (June 22-July 22).
The “new orders” sub-index dropped from 49.8 in the second month to 49.52 in the third month to 33.98 in the fourth month.
The “supplier deliveries” sub-index, which measures how fast deliveries are made, fell from 59.23 in the month ending May 21 to 56.19 in the month ending June 21 to 49.62 in the month ending July 22.
The “raw materials inventory” sub-index decreased from 49.49 in the month ending May 21 to 45.73 in the month ending June 21, but increased to 47.81 in the month ending July 22.
The PMI reading of “employment” sub-index fell from 52.05 in the second month to 51.5 in the third month but rebounded to 54.87 in the fourth month of the year.
To calculate PMI, seven secondary criteria were 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 climbed from 76.25 in the month ending May 21 to 77.19 in the month ending June 21 to 84.02 in the month ending July 22.
The “warehouse inventory” sub-index increased from 45.58 in the month ending May 21 to 51.32 in the month ending June 21, but shrank to 48.36 in the month ending July 22.
The “exports” sub-index improved from 44.69 in the second month to 48.40 in the third month, but fell to 42.09 in the month ending July 22.
The “prices of manufactured products or services” sub-index decreased from 59.81 in the month ending May 21 to 58.97 in the month ending June 21 to 58.18 in the month ending July 22.
The “fuel consumption” sub-index climbed from 57.1 in the month ending May 21 to 64.50 in the month ending June 21, but fell to 56.57 in the month ending July 22.
The “sales” sub-index rose from 51.15 in the month ending May 21 to 53.80 in the month ending June 21, but plunged to 42.67 in the month ending July 22.
The sub-index entitled “business output forecasts for the following month” improved from 58.96 in the month ending May 21 to 63.78 in the month ending June 21, but slid to 57.01 in the month ending July 22.
The overall PMI decreased from 53.84 in the month ending May 21 to 51.27 in the month ending June 21 to 44.62 in the month ending July 22.
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.
