Overall Economic PMI Slightly Improves

EghtesadOnline: The Purchasing Managers’ Index, known by its Farsi acronym Shamekh, for Iran's overall economy settled at 46.43 in the month ending August 21 from 45.47 in the month ending July 21, indicating 0.96 points or 2.11% improvement.

News ID: ۷۵۰۹۱۳

07 September 2020

A report by the Statistics and Economic Analysis Center of the Iran Chamber of Commerce, Industries, Mines and Agriculture, the sponsor and coordinator of the survey, says the industries and services sectors remained in a deep downturn during the month under review; all main sub-indexes fell below the threshold level except for supplier deliveries and employment.

The headline PMI is a number from 0 to 100, such that over 50 shows an expansion of the economy when 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 report, the "business output" sub-index decreased from 51.05 in the third Iranian month (May 21-June 20) to 46.4 in the fourth Iranian month (June 21-July 21) but improved slightly to 47.58 in the fifth Iranian month (July 22-August 21).

The "new orders" sub-index fell from 49.28 in the third month to 44.39 in the fourth month to 41.53 in the fifth month.

The "supplier deliveries" sub-index, which measures how fast deliveries are made, dropped from 52.07 in the month ending June 20 to 47.71 in the month ending July 21 but increased to 53.28 in the month ending August 21.

The "raw materials inventory" sub-index fell from 40.99 in the month ending June 20 to 35.29 in the month ending July 21 but rose to 40.24 in the month ending August 21.

The PMI reading of "employment "sub-index increased from 44.76 in the month ending June 20 to 49.37 in the month ending July 21 to 50.32 in the month ending August 21.

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 dropped from 91.94 in the month ending June 20 to 89.52 in the month ending July 21 but climbed to 90.27 in the month ending August 21.

The "warehouse inventory" sub-index dropped from 48.40 in the month leading to June 20 to 42.78 in the month ending July 21 but improved to 48.40 in the month ending August 21.

The "exports" sub-index slid from 43.96 in the third fiscal month to 42.88 in the fourth fiscal month but increased to 42.91 in the fifth fiscal month.

The "prices of manufactured products or services" sub-index decreased from 71.39 in the month ending June 20 to 70.05 in the month ending July 21 to 64.26 in the month ending August 21.

The "fuel consumption" sub-index rose from 57.87 in the month ending June 20 to 59.92 in the month ending July 21 but dropped to 54.44 in the month ending August 21.

The "sales" sub-index declined from 47.69 in the month ending June 20 to 44.69 in the month ending July 21 to 43.45 in the month ending August 21.

The sub-index entitled as "business output forecasts for the following month" plunged from 50.83 in the month ending June 20 to 44.64 in the month ending July 21 but improved to 51.55 in the month leading to August 21.

The overall PMI dropped from 48.41 in the month ending June 20 to 45.47 in the month ending July 21 but improved to 46.43 in the month ending August 21.

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.