New data on Purchasing Managers' Index for local industries shows the benchmark stands at a new high in the current Iranian year’s second month (April 21-May 21).
PMI settled at 66.96 from the period, up from 35.63 in the preceding month (March 21-April 20), the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture reported.
It is an indicator of the economic health of manufacturing and services sectors, providing 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.
“Wood, Paper and Furniture" posted the highest PMI with a reading of 76.3 while “Metallic Industries” registered the lowest of 62.6.
According to ICCIMA, all sub-indexes indicated strong growth as they do every year in the second month of the year following contraction in the first month of the year (starting March 21), which coincides with the long Iranian New Year holidays.
According to business owners, local industries experienced a prolonged shutdown in the first month of the year due to volatile foreign exchange rates against the rial and problems related to the supply of raw materials, the report reads.
“With the reopening of companies, the index has increased compared with the corresponding month of last year and most of the main sub-indices recorded their highest value. Severe uncertainty regarding prices, in addition to constant changes in laws and regulations, has caused concerns among companies in terms of short-term planning,” it said.
Main Sub-Indices
The "Production" sub-index for Iran’s industrial sector decreased from 63.46 in the 12th fiscal month of last year (Feb. 20-March 20) to 25.71 in the first month of the current fiscal year (March 21-April 20), but increased to 73.78 in the second month.
“Textile Industries” recorded the highest PMI of the production sector with 88.9 while “Metallic Industries” registered the lowest PMI with 64.4.
"New Orders" declined from 62.14 in the month ending March 20 to 30.68 in the month ending April 20, but grew to 70.09 in the month ending May 21, with top performers being “Textile Industries” (88.9) and the worst being “Clothing and Leather” (60).
"Supplier Deliveries", which measures how fast deliveries are made, decreased from 65.53 in the month ending March 20 to 44.45 in the month ending April 20, but increased to 66.65 in the month ending May 21.
The highest “Supplier Deliveries” PMI was posted by “Rubber and Plastic” with 78.6 and the lowest was recorded for “Metallic Industries” and “Food Products” each with 63.3.
The "Raw Material Inventory" sub-index declined from 50.25 in the month ending March 20 to 39.19 in the month ending April 20, but grew to 55.81 in the month ending May 21.
"Wood, Paper and Furniture” posted the highest PMI with 80 while “Textile Industries” registered the lowest PMI of 33.3 among all groups.
PMI for the "Employment" decreased from 50.73 in the month ending March 20 to 47.07 in the month ending April 20, but increased to 59.56 in the month ending May 21.
"Wood, Paper and Furniture” posted the highest PMI (70) whereas "Rubber and Plastic” posted the lowest PMI (42.9).
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 86.97 in the month ending March 20 to 83.02 in the month ending April 20, but increased to 83.43 in the month ending May 21. The highest PMI was recorded for “Textile Industries” with a reading of 94.4 and the lowest for “Metallic Industries” with 74.4.
"Warehouse Inventory" increased from 42.44 in the month ending March 20 to 46.41 in the month ending April 20 and 54.14 in the month ending May 21. The lowest PMI for "Warehouse Inventory" sub-index was recorded for “Rubber and Plastic” with 39.3 and the highest was registered for “Non-Metallic Industries” with 63.3.
"Exports" decreased from 56.78 in the month ending March 20 to 40.41 in the month ending April 20, but increased to 52.92 in the month ending May 21. “Clothing and Leather” recorded the highest PMI of 75 for the “Exports” sub-index during the period while "Rubber and Plastic” posted the lowest PMI of 60.7.
"Prices of Manufactured Products" declined from 66.64 in the month ending March 20 to 66.41 in the month ending April 20 to 64.11 in the month ending May 21. PMI of the "Prices of Manufactured Products" sub-index was highest for “Clothing and Leather” (75) and lowest for "Machine Producers and Home Appliances" (56.8).
"Fuel Consumption" decreased from 55.37 in the month ending March 20 to 29.61 in the month ending April 20, but increased to 65.56 in the month ending May 21. “Clothing and Leather” recorded the highest PMI of 75 for “Fuel Consumption” during the period while "Rubber and Plastic” posted the lowest PMI of 60.7.
"Sales" declined from 64.24 in the 12th month of the previous year to 22.25 in the first month of the fiscal 2023-24, but increased to 71.85 in the second month of the current fiscal year. Industries categorized as “Textile Industries” registered the highest PMI (88.9) while “Clothing and Leather" registered the lowest (60).
The "Production Forecasts for the Following Month" sub-index increased from 40.34 in the month ending March 20 to 78.83 in the month ending April 20, but increased to 72.16 in the month ending May 21. "Textile Industries” registered the highest PMI of 88.9 and "Rubber and Plastic" the lowest PMI of 64.3.
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.
