Retail Purchasing Managers’ Index Improves Significantly

EghtesadOnline: Iran’s Retail Purchasing Managers’ Index stood at 51.19 in the month ending Aug. 21 to signal a significant improvement in the retail sector’s activities.

News ID: ۷۵۱۰۴۱

20 September 2020

Economy and Planning Division of Iran Chamber of Guilds has measured the PMI for Iran's real-estate and construction sectors, known by the Farsi acronym “Shamekh”, for the fifth month of the current Iranian year (July 22-Aug. 21).

The retail sector’s PMI for the fifth month of the current fiscal year settled at 51.19 from 37.50 in the preceding month (June 21-July 21), indicating a 36.51% improvement month-on-month, Mehr News Agency reported.

A reading above 50 indicates expansion in the sector while below 50 indicates contraction. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance. A higher than expected reading should be taken as a positive sign for businesspeople while a lower than expected reading should be taken as negative.

"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.

The retail PMI is based on five major survey fields: "new orders", "raw material inventory", "activity", "supplier deliveries" and "employment". To calculate PMI, seven secondary criteria are also surveyed by the center, namely "raw materials purchase prices", "warehouse inventory", "exports", "product price", "fuel consumption", "sales" and "production expectations".

It is measured through a monthly 12-question survey sent to senior executives active in retail sector.

"New orders", "employment", "sales" and "supplier deliveries" sub-indexes all posted improvements compared with the preceding month and helped increased the main retail PMI.

“New orders” registered the lowest PMI reading among five main sub-indexes. It stood at 40.48 in the month ending Aug. 21 compared with the previous month’s reading of 39.06.

The "employment" sub-index increased 4.41% from 42.19 in the fourth month while the "exports" sub-index decreased 1.59% in the month ending Aug. 21 from 37.50 in the month ending July 21.

The "supplier deliveries" sub-index, which measures how fast deliveries are made, registered the highest PMI among five main sub-indexes with a reading of 55.95 compared with previous month’s 51.56.

The “activity” sub-index stood at 36.51 during the month ending Aug. 21 compared with 37.50 of the previous month.

And, the "performance expectations for the following month" sub-index settled at 48.81 in the month ending Aug. 21 from 53.13 in the month ending July 21, showing business owners’ lack of confidence in the country’s economic stability.

The report fell short of referring to other indices and sub-indices.

Lower demand for durable goods due to the coronavirus crisis, decline in people’s purchasing power, lack of transparency in supply chain, micro-scale nature of economic enterprises, high end-costs, dependency on imports and instability of foreign currency exchange market as well as high inflation and prices of goods and services were the main problems plaguing the retail sector during the month under review, according to the report.