Iran reports another improvement in monthly PMI

Iran Chamber of Commerce, Industries, Mines, and Agriculture (ICCIMA) has released the country’s new PMI data for the fiscal month of Aban (October 22 – November 20, 2024), which has registered an improvement for a second month in a row.

The seasonally adjusted PMI was reported at 51.4, above the 50 mark that separates growth from contraction. The figure stood at 51.3 before the application of seasonal adjustment.

Seasonal adjustment, or deseasonalization, is a statistical method used to remove the seasonal component from a time series. It is typically applied when we aim to analyze the trend and cyclical deviations of a time series independently from its seasonal components.

After the preparation of dozens of PMI (Purchasing Managers' Index) reports by the Research Center of the Iran Chamber of Commerce, Industries, Mines, and Agriculture, the Center has now identified the seasonal components of these time series and has prioritized the seasonal adjustment in its monthly PMI reports.

Although the new PMI reading is more than 50.2 of the preceding month, the economic operators are still concerned about the foreign exchange rate and raw material shortages.

The businesses are also alarmed by the possibility of electricity and gas outages due to energy imbalances.

The Statistics and Economic Analysis Center of Iran Chamber of Commerce, Industries, Mines and Agriculture, the sponsor and coordinator of the survey, announces the whole economy PMI data in a report every month.

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.

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The “business activities” sub-index was reported at 51.5, which is above the 50 mark for a second month in a row. It indicates a slight improvement from 51.1 reported in a month earlier.

This is while electricity outages and the surging foreign exchange rates have given a rise to uncertainties about business activities in coming months.

The “new orders” sub-index (52.0) has registered the first improvement after it was reported under the 50 mark for six consecutive months. The improvement happened while the demands are still weak, particularly in the industry and construction sectors, due to liquidity shortages.

The “raw material price” sub-index was also reported at 82.2 in the month under review to register its highest in the past 18 months. The increase in raw material price was mainly caused by rising foreign exchange rates.

The “finished good inventory” sub-index (48.1) posted its lowest in five months. Following the increasing foreign exchange and high inflation of raw material prices, the companies have been apparently using their warehouse inventory to supply the already placed orders.

The “sales of goods and services” sub-index which was registered at 51.1 has grown less sharply compared to 54.8 of the preceding month. Although the index is above the 50 mark for a second month in a row, the sales are still insignificant due partly by the falling exports.

*The difference in the numbers compared to the previous period is due to the application and revision of the scientific method of seasonal adjustment in the time series data.