New data on the Purchasing Managers' Index show Iranian industries remain in a slump.
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 51.69 in the current Iranian year’s ninth month (Nov. 22-Dec. 21), slightly down from 52.49 in the preceding month (Oct. 23-Nov. 21).
This is the seventh 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 “Machine Producers and Home Appliances" posted the highest PMI with a reading of 59.57 while “Clothing and Leather” registered the lowest of 30.75.
Five Main Sub-Indices
The "Production" sub-index for Iran’s industrial sector decreased from 54.86 in the seventh fiscal month (Sept. 23-Oct. 22) to 54.1 in the eighth month of the current fiscal year (Oct. 23-Nov. 21) and to 53.22 in the ninth month.
“Machine Producers and Home Appliances" recorded the highest PMI of the production sector (71.74) while “Clothing and Leather” registered the lowest PMI with 20.
The "New Orders" sub-index increased from 45.08 in the month ending Oct. 22 to 49.86 in the month ending Nov. 21, but declined to 49.1 in the month ending Dec. 21, with top performers being “Vehicles and Related Parts” (57.69) and the worst being "Clothing and Leather” (25).
The "Supplier Deliveries" sub-index, which measures how fast deliveries are made, declined from 61.19 in the month ending Oct. 22 to 57 in the month ending Nov. 21 and to 56.31 in the month ending Dec. 21.
The highest “Supplier Deliveries” PMI was posted by "Rubber and Plastic" with 75 and the lowest was recorded for "Clothing and Leather” with 45.
The "Raw Material Inventory" sub-index decreased from 49.64 in the month ending Oct. 22 to 48.81 in the month ending Nov. 21 and to 46.53 in the month ending Dec. 21.
"Wood, Paper and Furniture” posted the highest PMI with 62.5 while “Clothing and Leather” registered the lowest PMI of 35 among all groups.
PMI for the "Employment" sub-index grew from 51.38 in the month ending Oct. 22 to 52.89 in the month ending Nov. 21, but declined to 52.79 in the month ending Dec. 21. "Metallic Industries” posted the highest PMI (60) whereas "Clothing and Leather" posted the lowest PMI (40).
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 65.33 in the month ending Oct. 22 to 74.99 in the month ending Nov. 21 and 83.29 in the month ending Dec. 21. The highest PMI was recorded for “Machine Producers and Home Appliances” with a reading of 97.83 and the lowest for " Wood, Paper and Furniture” with 66.67.
The "Warehouse Inventory" sub-index decreased from 55.18 in the month ending Oct. 22 to 53.27 in the month ending Nov. 21, but increased to 54.27 in the month ending Dec. 21. The lowest PMI for "Warehouse Inventory" sub-index was recorded for “Vehicles and Related Parts" with 40.38 and the highest was registered for “Non-Metallic Mineral Industries” with 66.67.
The "Exports" sub-index increased from 48.71 in the month ending Oct. 22 to 48.73 in the month ending Nov. 21, but declined to 47.28 in the month ending Dec. 21. PMI of the "Exports" sub-index was highest for “Petroleum and Gas Products” (60.71) and lowest for "Non-Metallic Mineral Industries" (41.67).
The "Prices of Manufactured Products" sub-index increased from 47.82 in the month ending Oct. 22 to 53.05 in the month ending Nov. 21 and 55.56 in the month ending Dec. 21. "Metallic Industries" recorded the highest PMI of 75 during the period while "Wood, Paper and Furniture” and “Non-Metallic Mineral Industries" each posted the lowest PMI of 37.5.
The "Fuel Consumption" sub-index increased from 51.84 in the month ending Oct. 22 to 58.8 in the month ending Nov. 21 and grew further to 62.49 in the month ending Dec. 21. Industries categorized as " Machine Producers and Home Appliances” registered the highest PMI measured for "Fuel Consumption" (71.74) while “Non-Metallic Industries" registered the lowest (41.67).
The "Sales" sub-index increased from 43.93 in the seventh month of the current year to 49.96 in the eighth fiscal month and to 50.05 in the ninth month of the fiscal 2022-23. “Vehicles and Related Parts” posted the highest sales PMI with 63.46 while “Clothing and Leather” registered the lowest PMI with 20.
The "Production Forecasts for the Following Month" sub-index decreased from 60.39 in the month ending Oct. 22 to 59.96 in the month ending Nov. 21 and to 58.84 in the month ending Dec. 21. Its sub-index "Textile Industries” registered the highest PMI of 81.25 and "Petroleum and Gas Products" the lowest PMI of 39.29.
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.
