Services Signals Covid Recovery

EghtesadOnline: The services sector grew by 7% in the first quarter of the current fiscal year that started on March 21 compared with last year’s corresponding period, according to the Central Bank of Iran.

News ID: ۷۸۷۰۷۰

28 September 2021

Noting that the services has shown distinct signs of recovery after having been hard hit by Covid-19 pandemic in the first quarter of last year (registering a -2.5% growth), the report attributes the expansion mainly to the subsectors of “transportation and warehousing”, “health and social work”, “wholesale, retail and auto repair”, “information and communications” and “professional, scientific and vocational”.

The Statistical Center of Iran has put the sector’s Q1 growth at 4.5%.

The oil sector grew by 23.3% and industries and mines by 2.1% as agriculture shrank by 0.9%, according to CBI.

SCI says industries and mines grew by 4.5% while agriculture contracted by 4.5%.

Employing 48.8% of Iranian Population

The services sector employed 48.8% of the Iranian employed population (11.55 million) in Q1 (March 21-June 21), 0.9% fewer than the corresponding period of last year, according to the latest data released by the Statistical Center of Iran.

The industrial and agricultural sectors provided 33.2% and 17.9% of jobs respectively.

Over 7.87 million were employed in the industrial sector, indicating an increase of 1.4% compared with the same period of the year before and 4.24 million worked in the agriculture sector, posting a 0.7% decrease YOY.

The services sector consists of wholesale and retail trade; restaurants and hotels; transport, storage and communications; financing, insurance, real-estate and business services; as well as community, social, education, health and personal services.

The services sector employed 9.55 million men and 2 million women in the three-month period.

Over 6.99 million men and 875,573 women were working in the industrial sector and 3.5 million men and 746,601 women worked in the agriculture sector in Q1.

Services sector accounted for 57.8% or 10.18 million of all jobs in urban areas and 22.6% or 1.36 million of jobs in rural areas.

The industrial sector made up 35% or 6.16 million of the jobs in urban areas and comprised 28.1% or 1.7 million of employment in rural areas.

This is while 7.1% or 1.25 million of the total jobs in urban areas and 49.4% or 2.99 million of the jobs in rural areas were in the agriculture sector.

The total Q1 employment rate was 37.7% (23.67 million), up 0.8% compared with the same quarter of the last Iranian year. Employment rates for men and women were 63.9% and 11.5%, respectively, which constituted 20.05 million men and 3.62 million women in Q1.

The employment rate was 36.5% (17.6 million people) in urban areas and 41.6% (6.06 million) in rural areas.

Employment is defined as persons of working age engaged in any activity to produce goods or provide services for pay or profit, whether at work during the reference period or not at work due to a temporary absence from a job, or to working-time arrangement.

Record High PPI Inflation

The overall Producer Price Index for the services sector (using the year ending March 2017 as a base year) stood at 322.8 in Q1, indicating a 11.2% increase compared with the preceding quarter, the Statistical Center of Iran reported.

The index measured for Q1 producer inflation in the services sector indicates a 48.7% increase compared with the same quarter of the year before; that is the highest year-on-year inflation since spring 2012 (the earliest available data on services producers' inflation on SCI’s website).

The average PPI for the services sector in the four-quarter period ending June 21 increased by 42% compared with the same period of the year before, which is the highest annual inflation since winter 2013 (the earliest available data on services producers' inflation on SCI’s website).

Services PPI is calculated based on the indexes of 13 subsectors, namely “water networks, wastewater management, and wastewater treatment” with a coefficient of 1.2%, “repairing motor vehicles and motorcycles” with 2.8%, “transportation and warehouse services” with 23.2%, “services regarding accommodation and food” with 4.8%, “information and communications” with 8.5%, “insurance services” with 1.7%, “real-estate services” with 26.8%, “professional, scientific and technical activities” with 3%, “administrative and support services” with 1.7%, “education” with 9.3%, “social work services” with 14.2%, “art, entertainment and leisure” with 1.1%, and “services categorized as others” with 1.8%.

For “water networks, wastewater management and wastewater treatment”, PPI stood at 199 in Q1, indicating a respective increase of 20% and 22% compared with the previous quarter and the same quarter of the year before. The average annual PPI for the subsector in the four-quarter period ending June 21 increased by 6.3%.

PPI for “repairing motor vehicles and motorcycles” stood at 507.1, indicating a 14% rise compared with the previous quarter and a 70.3% growth compared with the same quarter of the year before. The average PPI for the subsector in the four-quarter period ending June 21 grew by 61.6%.

The index for “transportation and warehouse services” stood at 380.6, posting a rise of 14.2% quarter-on-quarter and 60.5% year-on-year. The average annual PPI for the subsector in the four-quarter period increased by 54.5%.

For “services regarding accommodation and food”, PPI stood at 622.3, registering an increase of 17.2% QOQ and 84.5% YOY. The average annual PPI for the subsector in the four-quarter period surged by 65.9%.

For “information and communications”, it stood at 232.3, indicating a 6.4% rise compared with the previous quarter and a 25.6% increase compared with the same quarter of the year before. The average annual PPI for the subsector in the four-quarter period stood at 22%.

“Insurance services” saw the PPI stand at 209.5, registering a rise of 25.8% QOQ and 31.6% YOY. The average annual PPI for the subsector in the four-quarter period jumped by 21.9%.

For “real-estate services”, the index was at 201.7, posting a 3.8% rise compared with the previous quarter and a 25.7% increase compared with the same quarter of the year before. The average annual PPI for the subsector in the four-quarter period increased by 24.3%.

“Professional, scientific and technical activities” had a PPI of 276, indicating a 10.3% rise over the preceding quarter and a 45.2% increase over the same quarter of the year before. The average annual PPI for the subsector in the four-quarter period increased by 41.5%.

The PPI measured for the subsector of “administrative and support services” stood at 558.6, showing an 11.6% growth compared with the previous quarter and a 77.1% increase over the same quarter of the year before. The average annual PPI for the subsector in the four-quarter period soared by 62.9%.

“Education” recorded a PPI of 265.2, indicating a 1.9% rise over the preceding quarter and a 30.1% increase over the same quarter of the year before. The average annual PPI for the subsector in the four-quarter period increased by 30%.

For “social work services”, PPI stood at 402.5, indicating a 15.4% rise compared with the previous quarter and a 55.7% increase compared with the same quarter of the year before. The average annual PPI for the subsector in the four-quarter period swell by 46.2%.

“Art, entertainment and leisure” had a PPI of 331.4, indicating a 10.5% rise over the preceding quarter and a 42.8% increase over the same quarter of the year before. The average annual PPI for the subsector in the four-quarter period increased by 39.2%.

And, “services categorized as others” registered a PPI of 424.9, indicating a 13% rise over the preceding quarter and a 54.8% increase over the same quarter of the year before. The average annual PPI for the subsector in the four-quarter period jumped by 48.3%.