The Purchasing Managers' Index for local industries settled at 55.3 in the current Iranian year’s third month of the current year (May 22-June 21), down from 66.96 in the preceding month (April 21-May 21), 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.
“Machine Producers and Home Appliances" posted the highest PMI with a reading of 64.4 while “Metallic Industries” registered the lowest of 46.4.
According to ICCIMA, some industries and companies faced electricity and gas outages in the third month of the current year.
A surge in foreign exchange rates against the rial has reduced demand, following a plunge in the purchasing power of consumers.
Despite the increase in production costs due to the lack of liquidity of customers, companies cannot increase the prices of products that are already very high and many companies remain concerned about their supply chain of raw materials as in previous months, due to problems related to procuring foreign currency for imports.
Main Sub-Indices
The "Production" sub-index for Iran’s industrial sector increased from 25.71 in the first month of the current fiscal year (March 21-April 20) to 73.78 in the second month (April 21-May 21), but decreased to 56.39 in the third month (May 22-June 21).
“Textile Industries” recorded the highest PMI of the production sector with 72.22 while “Rubber and Plastic” registered the lowest PMI with 35.
"New Orders" grew from 30.68 in the month ending April 20 to 70.09 in the month ending May 21, but declined to 52.49 in the month ending June 21, with top performers being “Textile Industries” (72.22) and the worst being “Metallic Industries” (36.05).
"Supplier Deliveries", which measures how fast deliveries are made, increased from 44.45 in the month ending April 20 to 66.65 in the month ending May 21, but declined to 59.2 in the month ending June 21.
The highest “Supplier Deliveries” PMI was posted by "Machine Producers and Home Appliances" and “Clothing and Leather” each with 78.57 and the lowest was recorded for “Rubber and Plastic” with 55.
The "Raw Material Inventory" sub-index grew from 39.19 in the month ending April 20 to 55.81 in the month ending May 21, but declined to 51.31 in the month ending June 21.
"Food Products” posted the highest PMI with 59.68 while “Textile Industries” registered the lowest PMI of 27.78 among all groups.
PMI for "Employment" increased from 47.07 in the month ending April 20 to 59.56 in the month ending May 21, but declined to 57.21 in the month ending June 21.
“Clothing and Leather” posted the highest PMI (70) whereas "Wood, Paper and Furniture”, “Petroleum and Gas Products” and “Rubber and Plastic” posted the lowest PMI (each with 50).
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 increased from 83.02 in the month ending April 20 to 83.43 in the month ending May 21, but declined to 70.19 in the month ending June 21. The highest PMI was recorded for “Non-Metallic Mineral Industries” with a reading of 88.46 and the lowest for “Petroleum and Gas Products” with 57.14.
"Warehouse Inventory" increased from 46.41 in the month ending April 20 to 54.14 in the month ending May 21 and 54.5 in the month ending June 21. The lowest PMI for "Warehouse Inventory" sub-index was recorded for “Petroleum and Gas Products” with 32.14 and the highest was registered for “Textile Industries” with 66.67.
"Exports" increased from 40.41 in the month ending April 20 to 52.92 in the month ending May 21, but declined to 51.56 in the month ending June 21. “Petroleum and Gas Products” recorded the highest PMI of 60.71 for the “Exports” sub-index during the period while "Clothing and Leather” posted the lowest PMI of 28.57.
"Prices of Manufactured Products" declined from 66.41 in the month ending April 20 to 64.11 in the month ending May 21 to 53.76 in the month ending June 21. PMI of the "Prices of Manufactured Products" sub-index was highest for “Non-Metallic Industries” (75) and lowest for "Petroleum and Gas Products" (35.71).
"Fuel Consumption" grew from 29.61 in the month ending April 20 to 65.56 in the month ending May 21, but declined to 61.03 in the month ending June 21. “Machine Producers and Home Appliances” recorded the highest PMI of 78.57 for “Fuel Consumption” during the period while "Petroleum and Gas Products” posted the lowest PMI of 39.29.
"Sales" increased from 22.25 in the first month of the current year to 71.85 in the second month, but decreased to 52.17 in the third month of the current fiscal year. Industries categorized as “Non-Metallic Industries” registered the highest PMI (65.38) while “Clothing and Leather" and “Petroleum and Gas Products” registered the lowest (each with 42.86).
The "Production Forecasts for the Following Month" sub-index decreased from 78.83 in the month ending April 20 to 72.16 in the month ending May 21, and declined further to 63.08 in the month ending June 21. "Rubber and Plastic” registered the highest PMI of 75 and "Petroleum and Gas Products" the lowest PMI of 53.57.
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.
