Iran’s manufacturing sector slipped back into contraction in Aban 1404 (November 2025), as the Purchasing Managers’ Index (PMI) for industry fell to 49.9, below the neutral 50 mark, according to the latest report from the Iran Chamber of Commerce.
The brief recovery observed in the two preceding months, following reduced electricity outages, has thus stalled, raising concerns over the sector’s ability to sustain growth.
The data aligns with broader economic indicators for the first half of the Iranian year 1404 (March–September 2025), which show a 1.1% decline in industrial production and a marginal 0.1% GDP growth including oil, or -0.5% excluding oil. New orders, raw material inventories, and hiring remain weak, reflecting persistent pressures on production and investment.
Component analysis of the PMI illustrates the precarious position of Iran’s industry. Production and new orders hovered near neutral at 50.1 and 50.3 respectively, suggesting that industrial activity is maintaining minimal operational levels without significant expansion.
Meanwhile, inventories of purchased inputs stayed deep in contraction at 45.4 for the 21st consecutive month, highlighting ongoing supply chain disruptions exacerbated by volatile currency rates, rising input costs, and delays in foreign exchange allocations.
Labor market indicators reinforce this cautious environment. Employment remained subdued at 48.4, the 14th consecutive month below 50, reflecting industrial firms’ reluctance to hire amid shrinking sales, high production costs, and constrained financial resources.
Product sales and exports also lagged, with indices at 46.2 and 45.9 respectively, underscoring limited domestic demand and persistent export challenges tied to currency uncertainty and policy unpredictability.
Cost pressures continue to burden manufacturers, with raw material prices at 77.3 and output prices at 70, transferring much of the expense to final goods while further limiting purchasing power. While delivery speed improved slightly to 53.5, this is attributed more to lower order volumes than fundamental performance gains.
Despite a relatively optimistic production expectation index of 58.1, firms’ confidence is contingent on short-term relief from energy constraints, leaving underlying vulnerabilities unaddressed.
Experts warn that without stable access to raw materials, reduced cost pressures, and predictable regulatory and currency conditions, Iran’s industrial sector may face deeper contraction in the coming months.
The November PMI portrays an industry teetering on the edge of recession, with limited resilience to ongoing economic and policy shocks.
Structural reforms in currency allocation, supply chains, liquidity provision, and regulatory stability are deemed essential for reversing the downturn and restoring sustainable growth.
