The Purchasing Managers’ Index for Iran’s overall economy stood at a five-month high in the last fiscal month (Feb. 20-March 20).
The PMI, known by its Farsi acronym Shamekh, settled at 54.74 for the month under review from 51.55 registered in the previous month, indicating a 3.19-point or 6.19% rise.
The Purchasing Managers' Index indicates the prevailing direction of economic trends in the manufacturing and service sectors. The headline PMI is a number from 0 to 100, such that over 50 indicates an economic expansion compared with the previous month. A PMI reading under 50 indicates contraction and a reading of 50 implies no change.
PMI is an index of the prevailing direction of economic trends, aiming to provide information about business conditions to company directors, analysts and purchasing managers.
According to the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture, the sponsor and coordinator of the report, although the survey of businesses suggests an upturn in business activities, the surveyed enterprises faced a steep rise in expenses as a result of inconsistencies between growing prices of production costs (workers’ wages, energy prices and prices of raw materials and equipment) and sales prices.
Meanwhile, both the demand and supply sides are waiting for the conclusion of nuclear talks amid optimism about its positive impact on the business environment, which would also facilitate foreign trade.
Impact of Nuclear Deal Revival
Iran's foreign minister said on Sunday Washington is "imposing new conditions" in the negotiations to restore the 2015 nuclear agreement.
"On the issue of lifting sanctions, they [the Americans] are interested in proposing and imposing new conditions outside the negotiations," IRNA also quoted Hossein Amir-Abdollahian as saying.
"In the last two or three weeks, the American side has made excessive demands that contradict some paragraphs of the text."
Iran has been engaged for a year in negotiations with France, Germany, Britain, Russia and China directly, and the United States indirectly in the Austrian capital, Vienna, to revive the deal, known formally as the Joint Comprehensive Plan of Action (JCPOA).
"The Americans keep talking about the need for direct negotiations, but we have not seen the benefit of direct talks with the United States," Amir-Abdollahian said.
The 2015 agreement gave Iran sanctions relief in exchange for curbs on its nuclear program to guarantee that Tehran could not develop a nuclear weapon, something it has always denied wanting to do.
But the US unilateral withdrawal from the accord in 2018 and the reimposition of economic sanctions prompted Iran to begin rolling back its own commitments.
"We seek the lifting of sanctions, but with dignity and with a lasting agreement. Iran has stood and will stand by its redlines," the foreign minister said.
The Vienna negotiations aim to return the United States to the nuclear deal, including through the lifting of sanctions on Iran, and to ensure Tehran's full compliance with its commitments.
They have been paused since March 11 after Russia demanded guarantees that Western sanctions imposed following its February 24 conflict in Ukraine would not damage its trade with Iran.
Days later, Moscow said it had received the necessary guarantees.
"During my visit to Moscow, we agreed with the Russian side that if we reached an agreement in Vienna, Russia would not be an obstacle," Amir-Abdollahian said.
"We were close to concluding technical discussions with the three European countries, but at the same time we faced the crisis and the war in Ukraine," he added.
Talks had progressed most of the way toward reviving the deal, with different parties pointing to the "final phase", but pending issues are still unresolved.
Among the key sticking points is Tehran's demand to delist the Islamic Revolution Guards Corps, the ideological arm of Iran's military, from the US terror list, AFP reported.
PMI Sub-Indexes
The survey has five main indices to calculate the overall PMI.
Notably, all PMI sub-indices stood above the 50-mark except for “employment” that registered a 17-month low.
According to the report, the “business output” sub-index increased from 47.07 in the current fiscal year’s 10th month (Dec. 22-Jan. 20) to 55.7 in the 11th month (Jan. 21-Feb. 19) and grew to 58.81 in the 12th month (Feb. 20-March 20).
The “new orders” sub-index increased from 43.14 in the 10th month to 47.9 in the 11th month and grew to 55.44 in the 12th month.
The “supplier deliveries” sub-index, which measures how fast deliveries are made increased from 52.42 in the month ending Jan. 20 to 55.42 in the month ending Feb. 19 and grew to 59.76 in the month ending March 20.
The “raw materials inventory” sub-index increased from 43.81 in the month ending Jan. 20 to 47.29 in the month ending Feb. 19 and grew to 54.74 in the month ending March 20.
The PMI reading of “employment” sub-index increased from 49.91 in the month ending Jan. 20 to 51.05 in the month ending Feb. 19, but decreased to 44.82 in the month ending March 20.
To calculate PMI, seven secondary criteria are 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 declined from 75.68 in the month ending Jan. 20 to 73.65 in the month ending Feb. 19, but increased to 78.47 in the month ending March 20.
The “warehouse inventory” sub-index increased from 50 in the month ending Jan. 20 to 51.76 in the month ending Feb. 19, but decreased to 50.83 in the month ending March 20.
The “exports” sub-index increased from 47.14 in the 10th month to 48.51 in the 11th month and grew to 54.02 in the 12th month.
The “prices of manufactured products or services” sub-index decreased from 58.25 in the month ending Jan. 20 to 54.37 in the month ending Feb. 19, but grew to 57.97 in the month ending March 20.
The “fuel consumption” sub-index decreased from 69.83 in the month ending Jan. 20 to 55.17 in the month ending Feb. 19 and declined to 48.48 in the month ending March 20.
The “sales” sub-index increased from 47.61 in the month ending Jan. 20 to 50.66 in the month ending Feb. 19 and grew to 55.37 in the month ending March 20.
The sub-index of “business output forecasts for the following month” increased from 58.37 in the month ending Jan. 20 to 61.77 in the month ending Feb. 19, but declined to 35.29 in the month to March 20, the lowest since the final month of fiscal 2019-20.
The overall PMI increased from 46.94 in the month ending Jan. 20 to 51.55 in the month ending Feb. 19 and grew to 54.74 in the month ending March 20.
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.
