The Purchasing Managers’ Index, known by its Farsi acronym Shamekh, for Iran’s overall economy settled at 53.84 in the month ending May 21 from 39.65 in the month ending April 20, indicating a growth of 14.19 points or 35.79%.
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, shows the index has bounced back from the seasonal slump in the first month of the year that coincided with the Iranian New Year holidays for a fortnight, although economic players remain concerned about the future.
The headline PMI is a number from 0 to 100, such that over 50 shows an expansion of the economy 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 decreased from 58.39 in the 12th month (Feb. 19-March 20) of last year to 36.15 in the first month of the current year (March 21-April 20), but surged to 58.64 in the second month of the current year (April 21-May 21).
The “new orders” sub-index plunged from 55.52 in the 12th month to 31.53 in the first month but rebounded to 49.8 in the second month.
The “supplier deliveries” sub-index, which measures how fast deliveries are made, decreased from 59.67 in the month ending March 20 to 46.92 in the month ending April 20, but jumped to 59.23 in the month ending May 21.
The “raw materials” inventory sub-index decreased from 46.87 in the month ending March 20 to 41.86 in the month ending April 20, but increased to 49.49 in the month ending May 21.
The PMI reading of “employment” sub-index grew from 49.17 in the month ending March 20 to 49.62 in the month ending April 20 to 52.05 in the month ending May 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 climbed from 78.56 in the month ending March 20 to 81.86 in the month ending April 20, but fell to 76.25 in the month ending May 21.
The “warehouse inventory” sub-index rose from 47.01 in the month ending March 20 to 48.7 in the month ending April 20, but dropped to 45.58 in the month ending May 21.
The “exports” sub-index fell from 47.8 in the 12th month to 41.31 in the first month but improved to 44.69 in the second month.
The “prices of manufactured products or services” sub-index increased from 59.12 in the month ending March 20 to 65.73 in the month ending April 20, but decreased to 59.81 in the month ending May 21.
The “fuel consumption” sub-index sank from 57.88 in the month ending March 20 to 38.46 in the month ending April 20 but climbed to 57.1 in the month ending May 21.
The “sales” sub-index fell from 60.3 in the month ending March 20 to 31.43 in the month ending April 20, but rose to 51.15 in the month ending May 21.
The sub-index entitled “business output forecasts for the following month” surged from 44.57 in the month ending March 20 to 62.98 in the month ending April 20, but dropped to 58.96 in the month ending May 21.
The overall PMI decreased from 54.73 in the month ending March 20 to 39.65 in the month ending April 20, but surged to 53.84 in the month ending May 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.