New data released on Purchasing Managers’ Index for Iran’s overall economy show business expectations have turned positive after four consecutive months of downturn in the benchmark index.
The PMI, known by its Farsi acronym Shamekh, for Iran’s overall economy settled at 51.55 in the current Iranian year’s 11th month (Jan. 21-Feb. 19) from 46.94 registered in the previous month, indicating a 4.61-point or 9.82% rise.
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.
Hope for Diplomatic Breakthrough
According to the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture, the sponsor and coordinator of the report, the survey of businesses for the month under review indicates hope of a political breakthrough improving the economic climate.
“Iran hopes to resolve all outstanding issues with the visiting UN nuclear chief,” a senior Iranian official told state TV on Saturday, in the latest push to secure the revival of a 2015 nuclear deal between the Islamic Republic and world powers.
Tehran and Washington have held more than 11 months of indirect talks in Vienna, Austria, on reviving the pact, which limited the scope of Iran's nuclear program, in return for the lifting of economic sanctions.
"It is expected that general issues between us and the agency will be reviewed regarding how to pursue various matters in the future. God willing, there will be an understanding," spokesperson for Iran's Atomic Energy Organization, Behrouz Kamlavandi, told state television.
“International Atomic Energy Agency chief Rafael Grossi, who arrived in Tehran late Friday, will hold talks with Iranian Foreign Minister Hossein Amir-Abdollahian before returning to Vienna in the afternoon.”
Grossi's trip has raised hopes for progress on one of the last thorny issues blocking a deal to revive the nuclear pact the US abandoned in 2018 and reimposed far-reaching sanctions on Iran.
Since 2019, Tehran has gone back on its commitments under the nuclear deal known as the Joint Comprehensive Plan of Action in response to the US walkout.
All parties involved in the talks aimed at bringing Tehran and Washington back into compliance with the nuclear pact have said they were close to reaching an agreement.
Iranian officials told Reuters that Tehran and the IAEA "could agree a roadmap to close the outstanding issues", which will potentially clear the way for a deal, Reuters reported.
The ICCIMA survey also shows fluctuations of Iranian rial against foreign currencies, coupled with expectations of a decline in prices against the backdrop of uncertainties about economic conditions, have led to a fall in demand.
PMI Sub-Indexes
According to the report, the “business output” sub-index decreased from 53.13 in the current fiscal year’s ninth month (Nov. 22-Dec. 21) to 47.07 in the 10th month (Dec. 22-Jan. 20), but grew to 55.7 in the 11th month (Jan. 21-Feb. 19).
The “new orders” sub-index decreased from 48 in the ninth month to 43.14 in the 10th month, but grew to 47.9 in the 11th month.
The “supplier deliveries” sub-index, which measures how fast deliveries are made, decreased from 59.23 in the month ending Dec. 21 to 52.42 in the month ending Jan. 20, but increased to 55.42 in the month ending Feb.19.
The “raw materials inventory” sub-index decreased from 46.49 in the month ending Dec. 21 to 43.81 in the month ending Jan. 20, but increased to 47.29 in the month ending Feb. 19.
The PMI reading of “employment” sub-index increased from 48.74 in the month ending Dec. 21 to 49.91 in the month ending Jan. 20 and grew to 51.05 in the month ending Feb. 19.
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 declined from 82.01 in the month ending Dec. 21 to 75.68 in the month ending Jan. 20 and decreased to 73.65 in the month ending Feb. 19.
The “warehouse inventory” sub-index increased from 49.72 in the month ending Dec. 21 to 50 in the month ending Jan. 20 and grew to 51.76 in the month ending Feb. 19.
The “exports” sub-index decreased from 47.77 in the ninth month to 47.14 in the 10th month and declined to 48.51 in the 11th month.
The “prices of manufactured products or services” sub-index increased from 55.39 in the month ending Dec. 21 to 58.25 in the month ending Jan. 20, but declined to 54.37 in the month ending Feb. 19.
The “fuel consumption” sub-index increased from 67.88 in the month ending Dec. 21 to 69.83 in the month ending Jan. 20, but declined to 55.17 in the month ending Feb. 19.
The “sales” sub-index decreased from 54.03 in the month ending Dec. 21 to 47.61 in the month ending Jan. 20, but grew to 50.66 in the month ending Feb. 19.
The sub-index of “business output forecasts for the following month” increased from 56.03 in the month ending Dec. 21 to 58.38 in the month ending Jan. 20, and grew to 61.77 in the month ending Feb. 19.
The overall PMI decreased from 50.97 in the month ending Dec. 21 to 46.94 in the month ending Jan. 20, but grew to 51.55 in the month ending Feb. 19.
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.
