Iran’s PMI Declines by 5.1%

EghtesadOnline: The Purchasing Managers’ Index, known by its Farsi acronym Shamekh, for the overall economy of Iran settled at 44.47 in the month ending Oct. 21 from 46.86 in the month ending Sept. 21, indicating a decline of 2.39 points or 5.1%.

News ID: ۷۵۱۴۵۴

10 November 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 price hikes of raw materials and producer goods as well as a decrease in sales were the main challenges faced by economic operators over the month.

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 increased from 47.58 in the fifth month (July 22-Aug. 21) to 48.98 in the sixth month (Aug. 22-Sept. 21), but dropped to 43.51 in the seventh month (Sept. 22-Oct. 21).

The “new orders” sub-index increased from 41.53 in the fifth month to 46.93 in the sixth month, but slid to 46.16 in the seventh month.

The “supplier deliveries” sub-index, which measures how fast deliveries are made, decreased from 53.28 in the month ending Aug. 21 to 48.50 in the month ending Sept. 21 and to 47.90 in the month ending Oct. 21.

The “raw materials inventory” sub-index fell from 40.24 in the month ending Aug. 21 to 35.64 in the month ending Sept. 21, but rebounded to 36.55 in the month ending Oct. 21.

The PMI reading of “employment” sub-index dropped from 50.32 in the month ending August 21 to 48.46 in the month ending Sept. 21 and to 44.51 in the month ending Oct. 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 90.27 in the month ending August 21 to 88.75 in the month ending Sept. 21, but jumped to 93.17 in the month leading to Oct. 21.

The “warehouse inventory” sub-index declined from 48.40 in the month ending August 21 to 43.01 in the month ending Sept. 21, but climbed to 46.42 in the month ending Oct. 21.

The “export” sub-index plummeted from 42.91 in the fifth fiscal month to 41.56 in the sixth fiscal month, but improved to 42.49 in the seventh month.

The “prices of manufactured products or services” sub-index increased from 64.26 in the month ending August 21 to 72.33 in the month ending Sept. 21 and to 77.31 in the month ending Oct. 21.

The “fuel consumption” sub-index fell from 54.44 in the month ending Aug. 21 to 53.47 in the month ending Sept. 21, but went up to 53.74 in the month ending Oct. 21.

The “sales” sub-index rose from 43.45 in the month ending Aug. 21 to 46.20 in the month ending Sept. 21, but plunged to 41.85 in the month ending Oct. 21.

The sub-index entitled “business output forecasts for the following month” sank from 51.55 in the month leading to Aug. 21 to 44.51 in the month ending Sept. 21 and to 41.15 in the month ending Oct. 21.

The PMI for Iran’s overall economy improved from 46.43 in the month ending Aug. 21 to 46.86 in the month leading to Sept. 21, but slid to 44.47 in the month ending Oct. 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.