The Purchasing Managers’ Index for Iranian industries in the current fiscal year’s seventh month (Sept. 23-Oct. 22) settled at 50.83 from 57.66 in the preceding month (Aug. 23-Sept. 22), indicating an 11.85% decline as reported by the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture.
The PMI is locally known by its Farsi acronym Shamekh.
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.
"Wood, paper and furniture industries" posted the highest PMI with a reading of 61.82 during the month under review while "non-metallic mineral industries" registered the lowest PMI of 40.56.
Five Main Sub-Indices
The "production" sub-index for Iran’s industrial sector increased from 40.26 in the current fiscal year’s fifth month (Jun. 23-Aug. 22) to 61.96 in the sixth month (Aug. 23-Sept. 22), but decreased to 51.31 in the seventh month.
Industries classified as "others" recorded the highest PMI of the "production" sector (66.67) while " non-metallic mineral industries" registered the lowest PMI with a reading of 38.89.
The "new orders" sub-index increased from 41.41 in the month ending Aug. 22 to 58.93 in the month ending Sept. 22 and grew to 45.22 in the month ending Oct. 22, with the top performing industries being "metallic industries" (54.81) and the worst being "non-metallic mineral industries" (27.78).
The "supplier deliveries" sub-index, which measures how fast deliveries are made, declined from 55.54 in the month ending Aug. 22 to 59.49 in the month ending Sept. 22, but grew to 60.21 in the month ending Oct. 22.
The highest supplier deliveries PMI was posted by "wood, paper and furniture" with a reading of 77.27 and the lowest was recorded for "textile industries" with a reading of 41.67.
The "raw material inventory" sub-index increased from 42.18 in the month ending Aug. 22 to 48.75 in the month ending Sept. 22, but declined to 44.52 in the month ending Oct. 22.
"Wood, paper and furniture" posted the highest PMI (68.18) while "clothing and leather" registered the lowest PMI reading of 25 among all groups.
The PMI reading of "employment" sub-index broke above the threshold. It increased from 51.02 in the month ending Aug. 22 to 53.26 in the month ending Sept. 22 and grew to 54.77 in the month ending Oct. 22.
Industries classified as "rubber and plastic" posted the highest PMI reading (71.43) whereas clothing and leather posted the lowest PMI (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 decreased from 82.53 in the month ending Aug. 22 to 79.73 in the month ending Sept. 22 and declined to 79.71 in the month ending Oct. 22.
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 "clothing and leather" with a reading of 95 and the lowest for industries categorized as "machine-making and home appliances" with 66.67.
The "warehouse inventory" sub-index decreased from 51.26 in the month ending Aug. 22 to 50.07 in the month ending Sept. 22, but grew to 60.21 in the month ending Oct. 22.
The lowest PMI reading for "warehouse inventory" sub-index was recorded for "others" with 33.33 and the highest was registered for "machine-making and home appliances" with 76.19.
The "exports" sub-index increased from 44.32 in the month ending Aug. 22 to 51.36 in the month ending Sept. 22, but declined to 43.57 in the month ending Oct. 22.
PMI reading of "exports" sub-index was the highest for "Wood, paper and furniture" (59.09) and lowest for industries categorized as "non-metallic mineral industries" (16.67).
The "prices of manufactured products" sub-index decreased from 60.01 in the month ending Aug. 22 to 56.07 in the month ending Sept. 22, but increased to 60.19 in the month ending Oct. 22.
"Petroleum and gas products industries" recorded the highest PMI of 87.5 during the seventh month of the Iranian year while industries classified as "vehicle and auto parts manufacturing industries" posted the lowest PMI reading of 51.85.
The "fuel consumption" sub-index grew from 46.44 in the month ending Aug. 22 to 59.32 in the month ending Sept. 22, but decreased to 54.28 in the month ending Oct. 22.
Industries categorized as "textile industries" registered the highest PMI measured for "fuel consumption" (83.33) while “textile industries” registered the lowest (27.78).
The "sales" sub-index increased from 38.22 in the fifth month of the current year to 58.19 in the sixth month, but declined to 46.53 in the seventh fiscal month.
"Others" posted the highest sales PMI with a reading of 66.67 and non-metallic industries registered the lowest PMI with a reading of 22.22.
The "production forecasts for the following month" sub-index decreased from 65.98 in the month ending Aug. 22 to 63.83 in the month ending Sept. 22 and declined to 60.20 in the month ending Oct. 22.
Sub-index with "others" registered the highest PMI reading of 83.33 and "non-metallic industries" the lowest PMI reading of 44.44.
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.
