Monthly PMI for Overall Economy Drops by 4.7%

EghtesadOnline: The overall Purchasing Managers’ Index, known by its Farsi acronym Shamekh, for Iran’s overall economy dropped in the third month of the current Iranian year (May 22-June 21) after emerging in the second month from a steep decline of the first fiscal month (started March 21).

News ID: ۷۸۶۶۳۸

10 July 2021

The overall PMI for Iran’s economy settled at 51.27 in the month ending June 21 from 53.84 in the month ending May 21, indicating a 2.57-point or 4.7% decline.

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 reading of the index suggests that the economy is still in expansion mode. However, economic players are concerned about power outages and shortage of raw materials. Indicates economic expansion 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 36.15 in the first month of the current year (March 21-April 20) to 58.64 in the second month of the current year (April 21-May 21), but dropped to 52.46 in the third month of the current year (May 22-June 21.)

The “new orders” sub-index surged from 31.53 in the first month to 49.8 in the second month, but fell to 49.52 in the third month.

The “supplier deliveries” sub-index, which measures how fast deliveries are made, jumped from 46.92 in the month ending April 20 to 59.23 in the month ending May 21, but dropped to 56.19 in the month ending June 21.

The “raw materials inventory” sub-index increased from 41.86 in the month ending April 20 to 49.49 in the month ending May 21, but decreased to 45.73 in the month ending June 21.

The PMI reading of “employment” sub-index grew from 49.62 in the month ending April 20 to 52.05 in the month ending May 21, but fell to 51.5 in the month ending June 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 plunged from 81.86 in the month ending April 20 to 76.25 in the month ending May 21, but went up to 77.19 in the month ending June 21.

The “warehouse inventory” sub-index shrank from 48.7 in the month ending April 20 to 45.58 in the month ending May 21 but expanded to 51.32 in the month ending June 21.

The “exports” sub-index improved from 41.31 in the first month to 44.69 in the second month to 48.40 in the third month.

The “prices of manufactured products or services” sub-index decreased from 65.73 in the month ending April 20 to 59.81 in the month ending May 21 to 58.97 in the month ending June 21.

The “fuel consumption” sub-index climbed from 38.46 in the month ending April 20 to 57.1 in the month ending May 21 to 64.50 in the month ending June 21.

The “sales” sub-index rose from 31.43 in the month ending April 20 to 51.15 in the month ending May 21 to 53.80 in the month ending June 21.

The sub-index titled “business output forecasts for the following month” slid from 62.98 in the month ending April 20 to 58.96 in the month ending May 21, but rebounded to 63.78 in the month ending June 21.

The overall PMI increased from 39.65 in the month ending April 20 to 53.84 in the month ending May 21, but fell to 51.27 in the month ending June 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.