Latest data released by the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture show the Purchasing Managers’ Index for Iran’s industries has hit a record high.
In the current fiscal year’s second month (April 21-May 21), PMI settled at 63.21 from 37.02 in the preceding month (March 21-April 20), indicating a 70.75% rise, according to the center.
Locally known by its Farsi acronym Shamekh, PMI is an indicator of the economic health of 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, under 50 indicates a contraction and a reading of 50 shows no change compared with the previous month. 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.
"Textile industries" posted the highest PMI with a reading of 81.8 while "rubber and plastic" registered the lowest PMI of 48.8.
The report noted that the increase in the purchase price of raw materials and products along with the growth in the costs of other production inputs such as wages, energy and transportation have kept the costs of production high and as a result many industries cannot compete with their counterparts in other countries.
“A sharp rise in raw material prices will affect the selling price of products in the coming months. So far, this price increase has not been applied by enterprises to retain their customers,” it said.
Five Main Sub-Indices
The "production" sub-index for Iran’s industrial sector decreased from 56.79 in the 12th month of the fiscal 2021-22 (Feb. 20-March 20) to 31.22 in the first month of the current fiscal year (March 21-April 20) and grew to 69.29 in the second month.
“Machine producers and home appliances" and “textile industries” recorded the highest PMI of the production sector (each 90) while "rubber and plastic" registered the lowest PMI with a reading of 43.8.
The "new orders" sub-index declined from 59.92 in the month ending March 20 to 28.4 in the month ending April 20 and increased to 64.88 in the month ending May 21, with top-performers being “textile industries” (90) and the worst being "textile industries” and “rubber and plastic” (43.8).
The "supplier deliveries" sub-index, which measures how fast deliveries are made, decreased from 65.14 in the month ending March 20 to 47.39 in the month ending April 20 and grew to 67.48 in the month ending May 21.
The highest supplier deliveries PMI was posted by "textile industries" with a reading of 85 and the lowest was recorded for "petroleum and gas products" with a reading of 44.4.
The "raw material inventory" sub-index decreased from 51.6 in the month ending March 20 to 38.98 in the month ending April 20 and grew to 47.95 in the month ending May 21.
"Textile industries" posted the highest PMI with 48.04 while "others" registered the lowest PMI reading of 12.5 among all groups.
The PMI reading of "employment" sub-index increased from 46.61 in the month ending March 20 to 48.44 in the month ending April 20 and reached 57.54 in the month ending May 21.
Industries classified as "textile industries" posted the highest PMI reading (65) whereas "clothing and leather" posted the lowest PMI (45.5).
Seven Secondary Criteria
To calculate PMI, seven secondary criteria were 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 increased from 75.47 in the month ending March 20 to 85.44 in the month ending April 20 and grew to 89.91 in the month ending May 21.
All 12 groups registered PMI readings higher than 50 for "raw material purchase price" sub-index in the second month of the current fiscal year. The highest PMI was recorded for "clothing and leather” and “food industries” each with a reading of 95 and the lowest for "non-metallic mineral industries" with 75.
The "warehouse inventory" sub-index increased from 42.51 in the month ending March 20 to 48.32 in the month ending April 20 and grew to 49.92 in the month ending May 21.
The lowest PMI reading for "warehouse inventory" sub-index was recorded for “others" with 25 and the highest was registered for "textile industries" and “wood, paper and furniture” each with 55.
The "exports" sub-index decreased from 53.02 in the month ending March 20 to 42.95 in the month ending April 20 and grew to 49.41 in the month ending May 21.
PMI reading of "exports" sub-index was the highest for "textile industries” (65) and lowest for "others" (37.5).
The "prices of manufactured products" sub-index increased from 58.37 in the month ending March 20 to 70.97 in the month ending April 20 and declined to 66.04 in the month ending May 21.
"Clothing and leather" recorded the highest PMI of 86.4 during the period while "non-metallic mineral industries” posted the lowest PMI of 50.
The "fuel consumption" sub-index decreased from 53.05 in the month ending March 20 to 37.43 in the month ending April 20 and grew to 63.58 in the month ending May 21.
Industries categorized as "wood, paper and furniture" and “textile industries” registered the highest PMI measured for "fuel consumption" (each with 80) while “others" registered the lowest (25).
The "sales" sub-index decreased from 59.69 in the 12th month of the fiscal 2021-22 to 25.13 in the first month of the current year and grew to 63.58 in the second month of the fiscal 2022-23.
“Textile industries” posted the highest sales PMI with a reading of 90 while “food industries” registered the lowest PMI each with a reading of 43.3.
The "production forecasts for the following month" sub-index increased from 34.8 in the month ending March 20 to 74.01 in the month ending April 20 and decreased to 64.7 in the month ending May 21. Its sub-index "machine producers and home appliances" registered the highest PMI reading of 84 and "food industries" the lowest PMI reading of 51.7.
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.
