New data on the Purchasing Managers' Index for Iran’s industrial sector show local industries registered lackluster performance in the current Iranian year’s eighth month (Oct. 23-Nov. 21).
The Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture’s new report shows PMI for local industries settled at 52.49 for the month, slightly up from 51.66 in the preceding month (Sept. 23-Oct. 22).
This is the sixth consecutive month the index is standing below 60.
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.
Industries categorized under “Vehicles and Related Parts" posted the highest PMI with a reading of 60.50 while “Clothing and Leather” registered the lowest of 35.42.
Five Main Sub-Indices
The "Production" sub-index for Iran’s industrial sector decreased from 55.74 in the sixth fiscal month (Aug. 23-Sept 22) to 54.86 in the seventh month of the current fiscal year (Sept. 23-Oct. 22) and to 54.1 in the eighth month.
“Vehicles and Related Parts" recorded the highest PMI of the production sector (68) while “Clothing and Leather” registered the lowest PMI with 33.33.
The "New Orders" sub-index decreased from 50.76 in the month ending Sept. 22 to 45.08 in the month ending Oct. 22, but grew to 49.86 in the month ending Nov. 21, with top performers being “Rubber and Plastic” (75) and the worst being "Clothing and Leather” (16.67).
The "Supplier Deliveries" sub-index, which measures how fast deliveries are made, increased from 57.12 in the month ending Sept. 22 to 61.19 in the month ending Oct. 22, but declined to 57 in the month ending Nov. 21.
The highest “Supplier Deliveries” PMI was posted by "Metallic Industries" with 62.22 and the lowest was recorded for "Non-Metallic Industries” with 50.
The "Raw Material Inventory" sub-index increased from 45.05 in the month ending Sept. 22 to 49.64 in the month ending Oct. 22, but declined to 48.81 in the month ending Nov. 21. "Clothing and Leather” posted the highest PMI with 66.67 while “Textile Industries” registered the lowest PMI of 25 among all groups.
PMI for the "Employment" sub-index decreased from 55.07 in the month ending Sept. 22 to 51.38 in the month ending Oct. 22, but grew to 52.89 in the month ending Nov. 21. Again, "Vehicles and Related Parts” posted the highest PMI (58) whereas "Clothing and Leather" posted the lowest PMI (33.33).
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 62.8 in the month ending Sept. 22 to 65.33 in the month ending Oct. 22 and 74.99 in the month ending Nov. 21. The highest PMI was recorded for “Rubber and Plastic” with a reading of 77.78 and the lowest for "Clothing and Leather” with 50.
The "Warehouse Inventory" sub-index increased from 54.1 in the month ending Sept. 22 to 55.18 in the month ending Oct. 22, but declined to 53.27 in the month ending Nov. 21. The lowest PMI for "Warehouse Inventory" sub-index was recorded for “Petroleum and Gas Products" with 38.24 and the highest was registered for “Textile Industries” with 72.22.
The "Exports" sub-index increased from 48.48 in the month ending Sept. 22 to 48.71 in the month ending Oct. 22, but rose to 48.73 in the month ending Nov. 21. PMI of the "Exports" sub-index was highest for “Vehicles and Related Parts” (56) and lowest for "Food Industries" (38.33).
The "Prices of Manufactured Products" sub-index increased from 46.95 in the month ending Sept. 22 to 47.82 in the month ending Oct. 22 and 53.05 in the month ending Nov. 21. "Clothing and Leather" recorded the highest PMI of 66.67 during the period while "Wood, Paper and Furniture” posted the lowest PMI of 39.29.
The "Fuel Consumption" sub-index increased from 51.11 in the month ending Sept. 22 to 51.84 in the month ending Oct. 22 and grew further to 58.8 in the month ending Nov. 21. Industries categorized as "Vehicles and Related Parts” registered the highest PMI measured for "Fuel Consumption" (72) while “Non-Metallic Industries" registered the lowest (38.89).
The "Sales" sub-index declined from 47.79 in the sixth month of the current year to 43.93 in the seventh fiscal month, but increased to 49.96 in the eighth month of the fiscal 2022-23. “Vehicles and Related Parts” posted the highest sales PMI with 64 while “Clothing and Leather” registered the lowest PMI with 16.67.
The "Production Forecasts for the Following Month" sub-index decreased from 62.18 in the month ending Sept. 22 to 60.39 in the month ending Oct. 22 and to 59.96 in the month ending Nov. 21. Its sub-index "Rubber and Plastic” registered the highest PMI of 81.25 and "Clothing and Leather" the lowest PMI of 41.67.
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.
