Iran's Housing PMI at Record Low

EghtesadOnline: The Purchasing Managers' Index for Iran's housing sector fell to its lowest level in the month ending April 19 since the release of PMI reports began in the fiscal month ending Oct. 22, 2019.

News ID: ۷۵۰۱۲۲

30 May 2020

Iran Chamber of Cooperatives has measured PMI for the country’s real-estate and construction sectors, under the Farsi acronym “Shamekh”, for the first month of the current Iranian year ending April 19.

The report shows the overall PMI settled at 18.75 from 35 in the 12th month of last Iranian year (Feb. 20-March 19), indicating a 46% decline. That is a record-low PMI reading for the construction and housing sector since housing PMI was calculated.

PMI is an indicator of the health of economic sectors. It provides information about current business conditions to decision-makers, analysts and purchasing managers.

Raw material inventory, employment conditions, new orders, supplier deliveries and export/production conditions were among the criteria quizzed, yielding a final score of between 1 and 100.

If a business scores 50, it means no change has been perceived compared to the previous month, while scores higher or lower than 50 indicate that the business is booming or stagnating respectively.

The housing PMI is based on five major survey fields: new orders, raw material inventory, production, supplier deliveries and employment.

The survey includes 12 questions about business conditions and any changes, whether it be improving, no changes or deteriorating.

It is measured through a monthly survey sent to senior executives of 100 companies active in the real-estate sector. It is based on five major survey areas: "new orders" with a coefficient of 30%, "raw material inventory" (10%), "production" (25%), "supplier deliveries" (15%) and "employment" (20%).

The "new orders" sub-index decreased 33% compared with the previous month, which was at 31. Consequently, demand for construction raw materials declined and prices of commodities such as steel declined slightly.

The "employment" sub-index dropped 21% compared with the previous month due to the outbreak of coronavirus. As a result, the number of incomplete housing projects increased 26%.

The month-on-month "sales and fuel consumption" sub-indexes fell by 60% and 35%, respectively.

The "exports" sub-index dropped by 16% compared with preceding month’s 47.

However, real-estate developers have expressed optimism about the gradual improvement of business in the following month.

Amid the outbreak of the novel coronavirus, the Purchasing Manager's Index for Iran's housing sector fell to the lowest level in the month ending March 19 since the index was first calculated for the the Iranian month beginning Oct. 22, 2019, with a reading of 44.30, Iran Chamber of Cooperatives' previous PMI report showed.