Overall PMI Increases for Three Consecutive Months

EghtesadOnline: The overall Purchasing Managers’ Index, known by its Farsi acronym Shamekh, for Iran’s economy settled at 48.83 in the month ending Jan. 19 from 47.77 in the month ending Dec. 20, 2020, indicating 1.06-point or 2.22% improvement.

News ID: ۷۸۵۹۵۴

08 February 2021

Data released by the Statistics and Economic Analysis Center of the Iran Chamber of Commerce, Industries, Mines and Agriculture, the sponsor and coordinator of the survey, show the index has been on the rise for three consecutive months since the Iranian month ending Oct. 21 when it hit a six-month low of 44.47.

The headline PMI is a number from 0 to 100, such that over 50 shows an economic expansion compared with the previous month. A PMI reading under 50 indicates contraction and a reading of 50 implies no change.

The figures indicate that Iran’s overall economic conditions are showing signs of improvement in the aftermath of hardships caused by US unilateral sanctions and the Covid-19 pandemic.

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.

The report shows the “raw materials inventory” sub-index hit 16-month high (since the beginning of PMI reporting) over the month under review. The sub-index climbed from 39.84 in the month ending Nov. 20 to 46.13 in the month ending Dec. 20 to 49.47 in the month ending Jan. 19.

The “business output” sub-index increased from 46.68 in the eighth month (Oct. 22-Nov. 20) to 46.75 in the ninth month (Nov. 21-Dec. 20) to 50.01 in the 10th month of the current Iranian year (Dec. 21, 2020-Jan. 19).

The “new orders” sub-index improved from 43.27 in the eighth month to 44.11 in the ninth month but dropped to 43.99 in the 10th month.

The “supplier deliveries” sub-index, which measures how fast deliveries are made, increased from 52.30 in the month ending Nov. 20 to 53.20 in the month ending Dec. 20 to 57.11 in the month ending Jan. 19.

The PMI reading of “employment” sub-index improved from 46.11 in the month ending Nov. 20 to 51.30 in the month ending Dec. 20, but fell to 48.09 in the month ending Jan. 19.

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 decreased from 83.09 in the month ending Nov. 20 to 76.64 in the month ending Dec. 20 to 72.76 in the month ending Jan. 19.

The “warehouse inventory” sub-index slid from 50.63 in the month ending Nov. 20 to 49.84 in the month ending Dec. 20 to 48.85 in the month ending Jan. 19.

The “exports” sub-index climbed from 42.23 in the eighth month to 46.14 in the ninth, but fell to 43.46 in the 10th month.

The “prices of manufactured products or services” sub-index decreased from 64.71 in the month ending Nov. 20 to 56.73 in the month ending Dec. 20 to 56.34 in the month ending Jan. 19.

The “fuel consumption” sub-index increased from 57.07 in the month ending Nov. 20 to 60.44 in the month ending Dec. 20, but dropped to 57.65 in the month ending Jan. 19.

The “sales” sub-index improved from 41.22 in the month ending Nov. 20 to 42.19 in the month ending Dec. 20 to 47.86 in the month leading to Jan. 19.

The “business output forecasts for the following month” climbed from 50.13 in the month ending Nov. 20 to 56.38 in the month ending Dec. 20 to 60.95 in the month ending Jan. 19.

The overall PMI grew from 45.70 in the month ending Nov. 20 to 47.77 in the month ending Dec. 20 to 48.83 in the month ending Jan. 19.

Among the most precise indicators showcasing a country’s economic condition, PMI 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.