According to the Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture, the sponsor and coordinator of the report, on the one hand, following the turmoil in the foreign currency market and other production costs, it is no longer possible to predict and plan ahead. On the other hand, many companies are facing problems with downstream industries such as petrochemicals in procuring raw materials, while car producers are failing to repay their debts and obligations.
Locally known by its Farsi acronym Shamekh, 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 compared with the previous month. A PMI reading under 50 represents a contraction and a reading of 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.
"Textile industries" posted the highest PMI with a reading of 76.67 during the month under review while "non-metallic mineral industries" registered the lowest PMI of 47.75.
Five Main Sub-Indices
The "production" sub-index for Iran’s industrial sector increased from 51.31 in the current fiscal year’s seventh month (Sept. 23-Oct. 22) to 59.25 in the eighth month, (Oct. 23-Nov. 21), but declined to 58.84 in the ninth month.
Industries classified as "textile industries" recorded the highest PMI of the "production" sector (76.67) while "petroleum and gas products industries" registered the lowest PMI with a reading of 45.
The "new orders" sub-index increased from 45.22 in the month ending Oct. 22 to 57.36 in the month ending Nov. 21, but declined to 53.33 in the month ending Dec. 21, with the top-performing industries being "textile industries" (88.89) and the worst being "chemical industries" (40.06).
The "supplier deliveries" sub-index, which measures how fast deliveries are made, increased from 60.21 in the month ending Oct. 22 to 60.63 in the month ending Nov. 21 and grew to 65.38 in the month ending Dec. 21.
The highest supplier deliveries PMI was posted by "textile industries" with a reading of 88.89 and the lowest was recorded for "chemical industries" with a reading of 58.49.
The "raw material inventory" sub-index increased from 44.52 in the month ending Oct. 22 to 47.75 in the month ending Nov. 21 and grew to 52.6 in the month ending Dec. 21.
"Clothing and leather" posted the highest PMI with 70 while "others" registered the lowest PMI reading of 40 among all groups.
The PMI reading of "employment" sub-index declined above the threshold. It increased from 54.77 in the month ending Oct. 22 to 56.10 in the month ending Nov. 21, but declined to 52.82 in the month ending Dec. 21.
Industries classified as "metallic industries" posted the highest PMI reading (68.75) whereas "clothing and leather" posted the lowest PMI with 40.
Seven Secondary Criteria
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 increased from 79.71 in the month ending Oct. 22 to 85.12 in the month ending Nov. 21, but decreased to 80.25 in the month ending Dec. 21.
All 12 groups registered PMI readings of higher than 50 for "raw material purchase price" sub-index in the ninth fiscal month. The highest PMI was recorded for "clothing and leather" with a reading of 95 and the lowest for industries categorized as "metallic industries" with 65.
The "warehouse inventory" sub-index decreased from 60.21 in the month ending Oct. 22 to 48.35 in the month ending Nov. 21, but increased to 52.82 in the month ending Dec. 21.
The lowest PMI reading for "warehouse inventory" sub-index was recorded for "textile industries" with 37.5 and the highest was registered for "rubber and plastic" with 87.5.
The "exports" sub-index increased from 43.57 in the month ending Oct. 22 to 54.7 in the month ending Nov. 21, but decreased to 45.37 in the month ending Dec. 21.
PMI reading of "exports" sub-index was the highest for "wood, paper and furniture" (57.14) and lowest for industries categorized as "clothing and leather" (35).
The "prices of manufactured products" sub-index increased from 60.19 in the month ending Oct. 22 to 62.63 in the month ending Nov. 21, but declined to 55.02 in the month ending Dec. 21.
"Wood, paper and furniture" recorded the highest PMI of 67.86 during the ninth month of the Iranian year while industries classified as "non-metallic mineral industries" posted the lowest PMI reading of 40.91.
The "fuel consumption" sub-index increased from 54.28 in the month ending Oct. 22 to 66.08 in the month ending Nov. 21, but decreased to 55.02 in the month ending Dec. 21.
Industries categorized as "textile industries" registered the highest PMI measured for "fuel consumption" (83.33) while “petroleum and gas products industries" registered the lowest (52.5).
The "sales" sub-index increased from 46.53 in the seventh month of the current year to 57.67 in the eighth month, but declined to 54.12 in the ninth fiscal month.
“Others” posted the highest sales PMI each with a reading of 90 while non-metallic industries registered the lowest PMI with a reading of 31.82.
The "production forecasts for the following month" sub-index increased from 60.2 in the month ending Oct. 22 to 62.57 in the month ending Nov. 21, but decreased to 62.05 in the month ending Dec. 21. Its sub-index "others" registered the highest PMI reading of 90 and "non-metallic industries" the lowest PMI reading of 37.5.
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.