The Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture has published its latest report on the purchasing managers’ index (PMI) in Iran, under the Farsi acronym “Shamekh”.
The new report for the Iranian month Dey (Dec. 22, 2018-Jan. 20) shows that despite a relative uptick in the index, Iran’s economy is still in decline.
Results published on ICCIMA's website show that PMI stood at 39.35 in Dey from 39.21 in the preceding month, Azar (Nov. 22-Dec. 21, 2018), indicating a 14-point growth month-on-month.
PMI is an indicator of the economic health of manufacturing and services sectors. The purpose of PMI is to provide information about current business conditions to company decision-makers, analysts and purchasing managers.
The headline PMI is a number from 0 to 100. A PMI above 50 represents an expansion when compared with the previous month. A PMI under 50 represents a contraction and a reading at 50 indicates no change.
PMI is based on a monthly survey sent to senior executives at more than 400 companies. It is based on five major survey areas: new orders with the importance weight of 30%, raw material inventory levels (10%), production (25%), supplier deliveries (15%) and employment (20%).
The surveys include 12 questions about business conditions and any changes, whether it is improving, no changes or deteriorating.
“In devising the data for the Shamekh index, the willingness of companies to cooperate has been considered the main principle to minimize incorrect or unreal comments,” Mohammad Reza Doost-Mohammadi, the head of ICCIMA’s statistics center, said.
“However, an expert team analyzes the data in comparison with macroeconomic evidence. For instance, the companies’ profile is registered in the capital market to ensure the report is published with the most realistic numbers,” he said
The company-specific details of the report remain confidential with ICCIMA, as the final report only outlines general conditions of an economic sector or industry.
At present, ICCIMA publishes reports only for Iran’s industrial sector and its 12 subset fields. It also plans to survey services and agriculture sectors in the near future. The report, which is published on a monthly basis, is a first of its kind in the country.
The "production" sub-index for Iran’s industrial sector dropped from 41.76 in Aban (Oct. 23-Nov. 21, 2018) to 37.01 in Azar to 39.66 in Dey.
The "new orders" sub-index decreased from 40.98 in Aban to 32.15 in Azar but climbed to 33.82 in Dey.
The "supplier deliveries" sub-index, which measures how fast deliveries are made, increased from 48.98 in Aban to 49.98 in Azar to 52.46 in Dey.
The "raw materials inventory levels" sub-index increased from 30.03 in Aban to 35.46 in Azar to 35.8 in Dey.
"Employment" improved from 39.38 in Aban to 46.34 in Azar, but dropped to 39.18 in Dey.
To calculate PMI, seven secondary criteria were also surveyed by the center, including raw material purchase prices, warehouse inventory level, exports, prices of products, fuel consumption, sales level and production expectations.
The "raw material purchase prices" sub-index declined from 81.77 in Aban to 61.83 in Azar, but increased to 66.92 in Dey.
The "exports" sub-index increased from 36.62 in Aban to 39.35 in Azar, but decreased to 38.09 in Dey.
The "prices of products" sub-index decreased from 63.49 in Aban to 48.33 in Azar and to 47.47 in Dey.
The "fuel consumption" sub-index fell from 51.69 in Aban to 47.51 in Azar but increased to 47.83.
The "sales level" sub-index fell from 33.98 in Aban to 30.33 in Azar, but improved to 32.21 in Dey.
The "production expectations" sub-index improved from 43.78 in Aban to 48.7 in Azar and to 55.24 in Dey.
The overall PMI index for industries decreased from 40.96 in Aban to 39.21 in Azar to 39.35 in Dey.
The PMI, among the most exact indicators showcasing a country’s economic condition, was first devised by the Institute for Supply Management in the US in 1948. It is calculated as (P1 * 1) + (P2 * 0.5) + (P3 * 0) where P1 is percentage of answers reporting an improvement, P2 is percentage of answers reporting no change and P3 is percentage of answers reporting a deterioration.
