The Purchasing Managers’ Index for industries during the fourth month of the current fiscal year (June 22-July 22) settled at 43.19 from 54.21 in the preceding month (May 22-June 21), indicating a 11.02-point or a 20.32% decline.
The announcement was made by the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture. The center has been measuring PMI, known by its Farsi acronym Shamekh, in Iran for the past 34 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.
“Machinery and home appliances” posted the highest PMI with a reading of 57.6 during last month while “wood, paper and furniture” industries registered the lowest PMI reading with 25.3.
Five Main Sub-Indices
The “production” sub-index for Iran’s industrial sector fell from 68.68 in the second month (April 21-May 21) to 53.64 in the third month (May 22-June 21) to 41.56 in the fourth month (June 22-July 22).
“Machinery and home appliances” recorded the highest PMI of the “production” sub-index with a reading of 62.5 while “wood, paper and furniture” industries registered the lowest PMI with a reading of 10.
The “new orders” sub-index dropped from 61.81 in the month ending May 21 to 53.28 in the month ending June 21 to 37.44 in the month ending July 22, with the top performing industries being “petroleum and gas industries” with 59.5 and worst being “wood, paper and furniture industries” with 15.
The “supplier deliveries” sub-index, which measures how fast deliveries are made, slid from 66.64 in the month ending May 21 to 59.23 in the month ending June 21 to 51.84 in the month ending July 22.
The highest supplier deliveries PMI was posted by “machinery and home appliances” with a reading of 70 and the lowest was recorded for “rubber and plastics” with a reading of 25.
The “raw material inventory” sub-index fell from 53.59 in the second month to 47.52 in the third month to 42.58 in the fourth month of the current year.
“Rubber and plastics” posted the highest PMI (66.7) for the “raw material inventory” sub-index while “clothing and leather industries” registered the lowest PMI reading of 18.8 among all groups.
The PMI reading of “employment” sub-index decreased from 59.66 in the month ending May 21 to 55.93 in the month ending June 21 to 47.68 in the month ending July 22.
“Chemicals” posted the highest “employment” PMI reading (52.9) while “wood, paper and furniture” posted the lowest PMI of the sub-index (35).
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 slid from 76.21 in the month ending May 21 to 73.83 in the month ending June 21, but rebounded to 79.42 in the month ending July 22.
The highest PMI for the “raw materials purchase prices” sub-index was recorded for “petroleum and gas industries” with a reading of 90.5 and the lowest for “rubber and plastics” with 41.7.
The “warehouse inventory” sub-index rose from 52.74 in the month ending May 21 to 55.5 in the month ending June 21, but shrank to 48.44 in the month ending July 22.
The highest PMI reading for “warehouse inventory” sub-index was registered for industries categorized as “others” with 70 and the lowest PMI reading was recorded for “wood, paper and furniture” with 30.
The “exports” sub-index jumped from 46.51 in the month ending May 21 to 47.86 in the month ending June 21, but fell to 45.31 in the month ending July 22.
PMI reading of “exports” sub-index was the highest for “textile industry” (58.3) and the lowest for “clothing and leather” (18.8).
The “prices of manufactured products” sub-index decreased from 59.82 in the month ending May 21 to 54.61 in the month ending June 21, but increased to 55.95 in the month ending July 22.
“Petroleum and gas industries” recorded the highest PMI of 78.6 for the “prices of manufactured products” sub-index during the fourth month of the Iranian year while “rubber and plastics industries” posted the lowest PMI reading of 25.
The “fuel consumption” sub-index decreased from 67.03 in the month ending May 21 to 59.62 in the month ending June 21 to 46.42 in the month ending July 22.
“Chemicals” registered the highest PMI measured for “fuel consumption” (59.6) while “paper, wood and furniture industries” registered the lowest (20).
“Sales” sub-index sank from 62.84 in the month ending May 21 to 53.31 in the month ending June 21 to 35.25 in the month ending July 22.
“Petroleum and gas products industries” posted the highest sales PMI with a reading of 59.5 while industries categorized as “others” registered the lowest PMI with a reading of 10.
The sub-index called “production forecasts for the following month” improved from 60.66 in the month ending May 21 to 63.12 in the month ending June 21, but dropped to 54.2 in the month ending July 22.
Industries categorized as “others” registered the highest PMI reading of 70 for “production forecasts for the following month” sub-index while “clothing and leather” posted the lowest PMI reading of 37.5.
The overall PMI for industries slid from 63 in the month ending May 21 to 54.21 in the month ending June 21 to 43.19 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.
