The Purchasing Managers' Index for local industries settled at 35.63 in the current Iranian year’s first month (March 21-April 20), up from 59.51 in the preceding month (Feb. 20-March 20), the latest data released by the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture show.
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.
“Rubber and Plastic" posted the highest PMI with a reading of 48.6 while “Textile Industries” registered the lowest of 23.3.
According to ICCIMA, all industrial activities see a decline in the index in the first month of the financial year 2023-24, as it coincided with the long Iranian New Year holidays that last more than two weeks.
“In view of the instability in foreign exchange market and the Central Bank of Iran’s failure to supply forex to companies for purchasing raw materials, most manufacturers were inclined to halt production in the first month of the year,” ICCIMA wrote.
“Fluctuations in the value of national currency, particularly its sharp devaluation, has spelled enormous economic risk, such that business owners have completely lost the ability to plan ahead, even for the short term. Besides, constant changes in laws and regulations, particularly in the Industries, Mining and Trade Ministry, have created major roadblocks for business owners.”
Main Sub-Indices
The "Production" sub-index for Iran’s industrial sector increased from 58.73 in the 11th fiscal month (Jan. 21-Feb. 19) to 63.46 in the 12th month of the last year (Feb. 20-March 20), but declined to 25.71 in the first month of the current fiscal year.
“Rubber and Plastic” recorded the highest PMI of the production sector with 36.4 while “Textile Industries” registered the lowest PMI with 11.1.
"New Orders" declined from 63.14 in the month ending Feb. 19 to 62.14 in the month ending March 20 to 30.68 in the month ending April 20, with top performers being “Non-Metallic Mineral Industries” (46.7) and the worst being “Petroleum and Gas Products” (18.8).
"Supplier Deliveries", which measures how fast deliveries are made, increased from 57.84 in the month ending Feb. 19 to 65.53 in the month ending March 20, but declined to 44.45 in the month ending April 20.
The highest “Supplier Deliveries” PMI was posted by “Food Products” with 51.8 and the lowest was recorded for “Textile Industries” with 22.2.
The "Raw Material Inventory" sub-index increased from 43.99 in the month ending Feb. 19 to 50.25 in the month ending March 20, but decreased to 39.19 in the month ending April 20.
"Wood, Paper and Furniture” posted the highest PMI with 63.6 while “Textile Industries” registered the lowest PMI of 16.7 among all groups.
PMI for the "Employment" declined from 53.45 in the month ending Feb. 19 to 50.73 in the month ending March 20 to 47.07 in the month ending April 20.
"Rubber and Plastic” posted the highest PMI (63.6) whereas "Clothing and Leather" posted the lowest PMI (31.8).
Secondary Sub-Indices
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 decreased from 89.81 in the month ending Feb. 19 to 86.97 in the month ending March 20 to 83.02 in the month ending April 20. The highest PMI was recorded for “Clothing and Leather” with a reading of 100 and the lowest for “Metallic Industries” with 62.5.
"Warehouse Inventory" decreased from 45.79 in the month ending Feb. 19 to 42.44 in the month ending March 20 and 46.41 in the month ending April 20. The lowest PMI for "Warehouse Inventory" sub-index was recorded for “Wood, Paper and Furniture” with 22.7 and the highest was registered for “Rubber and Plastic” with 63.6.
"Exports" increased from 49.46 in the month ending Feb. 19 to 56.78 in the month ending March 20, but decreased to 40.41 in the month ending April 20. PMI of the "Exports" sub-index was highest for “Non-Metallic Mineral Industries” (46.7) and lowest for "Clothing and Leather" (31.8).
"Prices of Manufactured Products" declined from 66.98 in the month ending Feb. 19 to 66.64 in the month ending March 20 to 66.64 in the month ending April 20. “Petroleum and Gas Products” recorded the highest PMI of 78.1 during the period while "Metallic Industries” posted the lowest PMI of 61.4.
"Fuel Consumption" decreased from 57.61 in the month ending Feb. 19 to 55.37 in the month ending March 20 to 29.61 in the month ending April 20. Industries categorized as “Rubber and Plastic” registered the highest PMI for "Fuel Consumption" (72.2) while “Textile Industries" registered the lowest (11.1).
"Sales" grew from 58.63 in the 11th month of the previous year to 64.24 in the 12th month of the fiscal 2022-23, but declined to 22.25 in the first month of the fiscal 2023-24. “Rubber and Plastic” registered the highest PMI of 36.4 and "Clothing and Leather" the lowest PMI of 4.5.
The "Production Forecasts for the Following Month" sub-index decreased from 62.61 in the month ending Feb. 19 to 40.34 in the month ending March 20, but increased to 78.83 in the month ending April 20. "Non-Metallic Mineral Industries” registered the highest PMI of 96.7 and "Petroleum and Gas Products" the lowest PMI of 71.9.
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.
