New data on Purchasing Managers’ Index for Iran’s overall economy show a downtrend in the index.
The PMI, known by its Farsi acronym Shamekh, for Iran’s overall economy settled at 51.07 in the current Iranian year’s eighth month (Oct. 23-Nov. 21) from 54.76 registered in the previous month, indicating a 3.69-point or 6.74% decline.
According to the Statistics and Economic Analysis Center of the Iran Chamber of Commerce, Industries, Mines and Agriculture, the sponsor and coordinator of the report, exorbitant prices, shortage of raw materials and decline in demand were the biggest problems faced by businesses during the period under review.
The headline PMI is a number from 0 to 100, such that over 50 indicates an 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 57.64 in the current fiscal year’s sixth month (Aug. 23-Sept. 22) to 56.16 in the seventh month (Sept. 23-Oct. 22) and declined to 53.86 in the eighth month (Oct. 23-Nov. 21).
The “new orders” sub-index decreased from 57.43 in the sixth month to 55.16 in the seventh month and declined to 47.38 in the eighth month.
The “supplier deliveries” sub-index, which measures how fast deliveries are made, increased from 54.51 in the month ending Sept. 22 to 64.07 in the month ending Oct. 22, but declined to 54.6 in the month ending Nov. 21.
The “raw materials inventory” sub-index decreased from 52.03 in the month ending Sept. 22 to 49.98 in the month ending Oct. 22 and declined to 44.62 in the month ending Nov. 21.
The PMI reading of “employment” sub-index declined from 52.65 in the month ending Sept. 22 to 47.84 in the month ending Oct. 22, but grew to 53.72 in the month ending Nov. 21.
To calculate PMI, seven secondary criteria are 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 grew from 80.13 in the month ending Sept. 22 to 83.52 in the month ending Oct. 22, but declined to 83.13 in the month ending Nov. 21.
The “warehouse inventory” sub-index increased from 50.09 in the month ending Sept. 22 to 53.04 in the month ending Oct. 22, but shrank to 48.13 in the month ending Nov. 21.
The “exports” sub-index decreased from 48.74 in the sixth month to 45.27 in the seventh month, but increased to 48.38 in the eighth month.
The “prices of manufactured products or services” sub-index increased from 62.52 in the month ending Sept. 22 to 63.55 in the month ending Oct. 22, but declined to 63.14 in the month ending Nov. 21.
The “fuel consumption” sub-index increased from 50.22 in the month ending Sept. 22 to 57.66 in the month ending Oct. 22 and grew to 64.26 in the month ending Nov. 21.
The “sales” sub-index decreased from 57.64 in the month ending Sept. 22 to 54.53 in the month ending Oct. 22, but grew to 54.74 in the month ending Nov. 21.
The sub-index of “business output forecasts for the following month” increased from 63.42 in the month ending Sept. 22 to 66.37 in the month ending Oct. 22, but declined to 59.74 in the month ending Nov. 21.
The overall PMI decreased from 55.55 in the month ending Sept. 22 to 54.76 in the month ending Oct. 22 and declined to 51.07 in the month ending Nov. 21.
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.
