Monthly Industrial PMI Down 14%

EghtesadOnline: The Purchasing Managers’ Index for Iranian industries during the third month of the current fiscal year (May 22-June 21) settled at 54.21 from 63 of the preceding month (April 21-May 21), indicating an 8.79-point or a 14% decline.

News ID: ۷۸۶۶۵۲

12 July 2021

The announcement was made by the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture. The center is measuring PMI, known by its Farsi acronym Shamekh, in Iran for the past 33 months.

PMI is an indicator of economic health for manufacturing and services sectors. It provides information about current business conditions to companies’ decision-makers, analysts and purchasing managers.

The headline PMI is a number from 0 to 100. A PMI above 50 represents an expansion when compared with the previous month. A PMI reading under 50 represents a contraction, and a reading at 50 indicates no change. The further away from 50 the greater the level of change.

PMI is based on a monthly survey sent to senior executives of more than 400 companies. It is based on five major survey areas: “new orders” (30%), “raw material inventory” (10%), “production” (25%), “supplier deliveries” (15%) and “employment” (20%).

The survey poses 12 questions about business conditions and any changes, whether it is improving, no changes or deteriorating.

“Clothing and leather” posted the highest PMI with a reading of 60 while “textile industries” registered the lowest PMI reading with 46.25.

Five Main Sub-Indices

The “production” sub-index for Iran’s industrial sector rose from 28.4 in the first month of the current year (March 21-April 20) to 68.68 in the second month (April 21-May 21) but fell to 53.64 in the third month (May 22-June 21.)

“Vehicles and related parts” recorded the highest PMI of the “production” sub-index with a reading of 65.22 while “wood, paper and furniture industries” registered the lowest PMI with a reading of 35.29.

The “new orders” sub-index jumped from 28.52 in the month ending April 20 to 61.81 in the month ending May 21 but dropped to 53.28 in the month ending June 21, with the top performing industries being “petroleum and gas products industries” and “vehicles and related parts” with 60.87 and worst being “wood, paper and furniture industries” with 41.18.

The “supplier deliveries” sub-index, which measures how fast deliveries are made, improved from 43.78 in the month ending April 20 to 66.64 in the month ending May 21, but slid to 59.23 in the month ending June 21.

The highest “supplier deliveries” PMI was posted by “food industries” with a reading of 67.65 and the lowest was recorded for industries categorized as “others” with a reading of 50.

The “raw material inventory” sub-index climbed from 43.01 in the month ending April 20 to 53.59 in the month ending May 21, but fell to 47.52 in the month ending June 21.

Industries categorized as “others” posted the highest PMI (66.67) for the “raw material inventory” sub-index while “textile industries” registered the lowest PMI reading of 31.25 among all groups.

The PMI reading of “employment” sub-index increased from 53.78 in the month ending April 20 to 59.66 in the month ending May 21, but decreased to 55.93 in the month ending June 21.

“Clothing and leather” posted the highest employment PMI reading (75) whereas “textile industries” posted the lowest PMI of the sub-index (37.5).

Seven Secondary Criteria

To calculate PMI, seven secondary criteria were also surveyed by the center, namely “raw materials purchase prices”, “warehouse inventory”, “exports”, “product price”, “fuel consumption”, “sales” and “production expectations.”

The “raw materials purchase prices” sub-index slid from 82.64 in the month ending April 20 to 76.21 in the month ending May 21 to 73.83 in the month ending June 21.

The highest PMI for the “raw materials purchase prices” sub-index was recorded for “non-metal mineral industries” with a reading of 94.44 and the lowest for “rubber and plastics” with 42.86.

The “warehouse inventory” sub-index dropped from 53.27 in the month ending April 20 to 52.74 in the month ending May 21, but jumped to 55.5 in the month ending June 21.

The highest PMI reading for “warehouse inventory” sub-index was registered for industries categorized as “others” with 75 and the lowest PMI reading was recorded for “petroleum and gas” products with 41.3.

The “exports” sub-index rose from 42.86 in the month ending April 20 to 46.51 in the month ending May 21 to 47.86 in the month ending June 21.

PMI reading of "exports” sub-index was the highest for “rubber and plastics” (64.29) and the lowest for “non-metal minerals” (38.89).

The “prices of manufactured products” sub-index decreased from 64.06 in the month ending April 20 to 59.82 in the month ending May 21 to 54.61 in the month ending June 21.

“Clothing and leather” recorded the highest PMI of 65 for the “prices of manufactured products” sub-index during the third month of the Iranian year while “rubber and plastics industries” posted the lowest PMI reading of 42.86.

The “fuel consumption” sub-index increased from 33.96 in the month ending April 20 to 67.03 in the month ending May 21, but slid to 59.62 in the month ending June 21.

“Machinery and home appliances” registered the highest PMI measured for “fuel consumption” (68) while “paper, wood and furniture industries” and “rubber and plastics” registered the lowest (50).

“Sales” sub-index surged from 27.03 in the month ending April 20 to 62.84 in the month ending May 21, but fell to 53.31 in the month ending June 21.

“Non-metal mineral industries” posted the highest sales PMI with a reading of 61.11 while “wood, paper and furniture” registered the lowest PMI with a reading of 44.12.

The sub-index called “production forecasts for the following month” plummeted from 74.94 in the month ending April 20 to 60.66 in the month ending May 21, but climbed to 63.12 in the month ending June 21.

“Rubber and plastics” registered the highest PMI reading of 78.57 for “production forecasts for the following month” sub-index while “metal industries” posted the lowest PMI reading of 50.94.

The overall PMI for industries improved from 37.28 in the month ending April 20 to 63 in the month ending May 21, but relapsed to 54.21 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.