Iran PMI Report - Bahman 1401 (January 21 - February 19)
Anticipation of the Nowruz holidays (which began on March 21) gave a boost to the Iranian economy in the calendar month of Bahman (January 21 – February 19), according to new purchasing managers’ index data published by the Iran Chamber of Commerce.
Whole economy PMI rose to 51.35, rising about the threshold of 50 after three months of economic contraction. The whole economy subindex for output rose to its highest level in eight months, reaching 53.45, led by a strong showing in Iran’s manufacturing sector.
Only two subindices remained below the threshold of 50. The subindex for new orders rose sharply, but ended at 49.60. Raw materials inventories continued to pose headaches for Iranian firms. Volatility in the forex market continued to disrupt the supply of raw materials.
With producer prices continuing to surge, the subindex for the inventory of raw materials and machinery stood at 42.20. Meanwhile, the subindex for the purchase price of raw materials and machinery jumped to 86.49, its highest rate over the past eight months.
Overall, a rebound in consumer demand lifted the Iranian economy. The whole economy subindex for sales reached its highest rate in seven months, rising to 57.21. But this rebound is seasonal—Iranian consumers always spend more in the weeks leading up to the Nowruz holiday—and optimism around the economic outlook remains muted.
The Iran Chamber of Commerce noted that although the manufacturing sector saw a strong rebound in output during Bahman, firm managers reported that the sector was still underperforming on a seasonally adjusted basis. The manufacturing subindex for new orders jumped to 63.14 as consumers, expecting ongoing price increases, rushed to buy goods in advance of the Nowruz holidays.
Manufacturing firms increased output in response to the increased demand. The output subindex rose to 58.73, its highest rate over the past eight months. With demand surging, the employment subindex also reached 53.45, its highest rate over the past five months. But the underlying economic headwinds remain and are likely to again drag down the performance of the manufacturing sector when the Nowruz holidays have passed.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Dey 1401 (December 22 - January 20)
New purchasing managers’ index (PMI) data for the Iranian calendar month of Dey (December 22 – January 20) shows a sharp contraction in Iran’s economy, continuing the recent trend. Whole economy PMI plummeted to 41.89, down from 49.14 in the previous month. The new data published by the Iran Chamber of Commerce points to the worst contraction since the first edition of the whole economy PMI report in October 2019 (excluding seasonal declines in Farvardin of each year and the COVID-19 pandemic).
Iranian firms faced even higher production costs given high inflation, volatility in the foreign exchange market, and an energy crisis precipitated by intense winter weather. The whole economy subindex for the inventory of raw materials and machinery tanked to 39.54, its lowest rate over the past 27 months, excluding Farvardin of each year. The whole economy subindex for output fell to 39.48.
Firms are also getting squeezed on the demand-side. The new orders subindex dropped to 40.82, the lowest reading in the last 18 months excluding the new year’s period.
The Iranian economy is also shedding jobs. The whole economy subindex for employment dropped to 46.62, its lowest rate over the past 10 months.
The manufacturing sector has generally been the bright spot for Iran’s economy, but resilience in the sector is increasingly in doubt. Manufacturing PMI fell to 45.60, tipping into a deep contraction. The output subindex dropped to 39.63, its lowest rate over the past four years, excluding Farvardin of each year and the outset of the COVID-19 pandemic.
The Iran Chamber of Commerce attributed the poor performance of the sector on energy shortages, which led to factory shutdowns, as well as the still rising price of raw materials. Manufacturers are also facing weak demand. The new orders subindex dropped to 44.19.
The whole economy subindex for the expectation of economic activity in the coming month stood at 52.70, continuing a downward trend. A growing proportion of economic operators appear to believe that Iran’s economic challenges are set to continue.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Azar 1401 (November 22 - December 21)
Iran’s economy contracted for the second month in a row according to new purchasing managers’ index (PMI) data for the Iranian calendar month of Azar (November 22 – December 21). Whole economy PMI rose to 49.15, but remained below the contraction threshold according to PMI data published by the Iran Chamber of Commerce.
The whole economy subindex for new orders improved slightly, rising to 48.47, but remained below 50 for the third month in a row, indicating that weak demand remains a drag on the economy. The small improvement in new orders pushed the output subindex to 50.51, just above the threshold.
Additional pressure rising from the continued devaluation of the rial was also reflected in the PMI report. The subindex for the inventory of raw materials and machinery plummeted to 46.41, falling sharply from 51.26 in the previous month. The subindex for the purchase price of raw materials and machinery surged to 85.25.
The continued economic disruptions are also having an impact on employment. Iran’s economy shed jobs at a faster rate in the month ending December 21. The employment subindex fell to 49.32, remaining below 50 for the second month in a row. The impact on employment is being felt most significantly in the services sector.
Iran’s manufacturing sector is performing better than the wider economy but continues to face headwinds. Manufacturing PMI stood at 51.69, marking a small decline from the previous month. Supply chain disruptions and high raw materials prices poses a challenge for output, which continued to grow, but at a slower rate. The subindex for the purchase price of raw material and machinery jumped to its highest rate over the past seven months and stood at 83.29. The manufacturing subindex for output stood at 53.22.
Manufacturing firms continued to struggle with soft demand and the new orders subindex remained below the threshold of 50 for the third month in a row, registering at 49.10.
As more time passes, Iranian manufacturers are becoming less optimistic. The economic headwinds may not be transitory. The subindex for the expectation of economic activity in the coming month plummeted to its lowest level over the past six months and stood at 58.84.
Business leaders have warned that they will be forced to hike prices soon as production overheads have increased significantly, adding to the inflationary outlook.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Aban 1401 (October 23 - November 21)
Iran’s economy fell into contraction in the Iranian calendar month of Aban (October 23 – November 21), as the economic impact of ongoing protests and political turmoil was increasingly felt.
Whole economy PMI fell to 47.39, indicating that the economy is in contraction. Iran’s worse economic performance reflected the second straight month of weak demand. The whole economy subindex for new orders fell to 43.91, with the services sector most effected. The sales subindex likewise indicated contraction for the second consecutive month at 48.21.
In turn response to softening demand, businesses have been cutting back on output. The output subindex dropped to 46.24, its lowest non-holiday rate over the past 15 months. In light of the economic headwinds, companies are also shedding jobs. The employment subindex dropped to 48.88, its lowest rate over the past eight months.
Meanwhile, despite the economy cooling off, pressures continue to pose challenges. The whole economy subindex for the purchase price of raw materials and machinery surged to 78.49, its highest rate over the past five months.
The subindex for the expectation of economic activity in the coming month fell further to 52.62. While most businesses appear to think economic pressures will ease, confidence is diminishing.
Meanwhile, the manufacturing sector remained in expansion. Manufacturing PMI showed a small improvement, rising to 52.49. This indicates that the protest activity during the survey period had a negligible impact on industrial activities—strikes appear to have been small and sporadic.
The manufacturing subindex for output remained almost unchanged compared to a month earlier and stood at 54.10. The new orders subindex continued its decline and fell to 49.86.
Continued weakening on the real is putting pressure on raw materials and machinery inventories. The relevant subindex remained below 50 for the third consecutive month with a reading of 48.81.
The subindex for the purchase price of raw material and machinery jumped to its highest level over the past five months and reached 74.99.
As in the case of whole economy PMI, economic sentiments in the manufacturing sector are worsening, even if respondents to the PMI survey remain generally optimistic. The subindex for the expectation of economic activity in the coming month also dropped to its lowest rate over the past five months to reach 59.96.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Mehr 1401 (September 23 - October 22)
Iran’s economy continued to grow in the Iranian calendar month of Mehr (September 23 – October 22), but growth slowed as new orders fell sharply following several weeks of national protests.
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New purchasing managers’ index data from the Iran Chamber of Commerce indicates that whole economy PMI fell to 50.19, down from 52.08 in the previous month. The slowdown in economic activity reflected a small drop in output. The whole economy sub-index for output was 51.60, down 0.74 points from the previous month. But the real impact on Iran’s economy came from the fall in new orders. The whole economy sub-index for new orders fell just over 6 points to 46.82.
Meanwhile, the sub-index for sales fell to 42.65, the lowest rate in 14 months. In it’s PMI report, the Iran Chamber of Commerce attributed to slowdown to the sharp drop in demand for goods and services and blamed the continued pressure on household purchasing power as well as “recent developments,” which refer to the ongoing protests triggered by the killing of Mahsa Amini.
The government has responded to the protests by curtailing interest access, which has also hurt sales activity in Iran’s large e-commerce sector.
Similar dynamics were observed in Iran’s manufacturing sector. Manufacturing PMI was 51.66, down 1.59 points from the previous month. Manufacturing output actually rose, indicating that planned strikes and other forms of labour protests have yet to impact production at Iranian factories. But new orders slowed significantly, with the relevant sub-index falling to 45.08, down 5.68 points from the previous month.
Business managers in the manufacturing sector appear to believe that the disruptions will be temporary—the sub-index for expectation of economic activity in the coming month was 60.39, well above the threshold of 50 that would indicate an expectation of contraction in the sector. Even so, business confidence appears shaken as the long-running pressures related to high producer prices are compounded by softening demand.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Shahrivar 1401 (August 23 - September 22)
New purchasing managers’ index (PMI) data published by the Iran Chamber of Commerce for the Iranian calendar month of Shahrivar (August 23 – September 22) indicates that Iran’s economy grew at the fastest rate in three months. Whole economy PMI was 52.08, reflecting strength in manufacturing output.
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Following the end of summer, a period of seasonally slow demand, new order rose. The subindex for new orders jumped to 52.87, the highest rate for the past four months. New orders lifted the manufacturing, agriculture, and services sectors.
Raw materials inventory continued to be a weakness for the Iranian economy. The subindex for inventory of raw materials and machinery continued its decline, dropping to 45.22. Business insiders blamed a lack of liquidity and working capital.
Iran’s manufacturing sector continued to expand. Manufacturing PMI rose to 53.25. The output subindex surged to 55.74. The new orders subindex jumped to 50.76, indicating growing demand. However, demand appears softer that the seasonal norm.
Manufacturers are continuing to struggle with high producer prices. The manufacturing subindex for the inventory of raw materials and machinery rose a few points to 45.05, but continued to indicate that the shortage of raw materials was worsening. Furthermore, the subindex for purchase price of raw materials jumped to 62.80, signalling continued inflationary pressure.
Overall, the Iranian economy remains in a period of fragile recovery. But diminished purchasing power continues to hamper growth. At the end of Shahrivar, a new wave of national protests began, which can also be expected to depress the economic outlook.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Ordibehesht 1401 (April 21 - May 21)
Iran’s economy rebounded to growth in the Iranian calendar month of Ordibehesht, which began on April 21. New purchasing managers’ index (PMI) data published by the Iran Chamber of Commerce points to a surge in demand and output—but the improved fortunes for Iranian firms appear temporary. ___STEADY_PAYWALL___
Whole economy PMI reached 56.17, the highest level over the past 32 months, as Iranian businesses returned to normal operations following the Nowruz holidays in March. The whole economy sub-index for output reached 61.37, its highest rate since the the index was launched 32 months ago. The jump in output was led by the manufacturing sector.
Higher output responded to a surge in demand. Rising inflation expectations spurred consumers and firms to buy goods before further price increases.
PMI data continued to show inflationary pressures. The whole economy sub-index for the purchase price of raw materials and machinery reached its highest rate over the past 19 months at 92.75. The sub-index for the retail price of goods and services also reached a 19-month peak at 70.05.
Business sentiments are turning more negative as prices continue to mount. The whole economy sub-index for the expectation of economic activity in the coming month dropped to 43.82. Businesses in the agriculture and services sectors expect their sectors to move towards contraction. According to the chamber, many businesses are struggling with surging production costs and state mandated price caps. Rising prices have also diminished the competitiveness of Iranian goods in export markets.
Meanwhile, manufacturing PMI rose to a two-year high at 63.21 on the back of strong output. The new orders sub-index also surged to a two-year high, reaching 64.88. But manufacturers expect demand to fall away as prices are adjusted to account for rising raw materials prices. Output will also face pressure as raw materials inventories fall—the relevant sub-index rose slightly to 47.95, but continued to indicate falling inventories.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Farvardin 1401 (March 21 - April 20)
New purchasing managers’ index (PMI) data from the Iran Chamber of Commerce showed that Iran’s economy contracted in the Iranian calendar month of Farvardin, which began on March 21. ___STEADY_PAYWALL___
Considering the extended Nowruz holidays, the economic slowdown was not unexpected. Still, whole economy PMI was several points lower than at the same point last year (37.49 vs. 39.65). Most businesses only traded for 15 days during the month of Farvardin.
The holiday period effected output, with the relevant whole economy sub-index falling to 28.52, one of the lowest levels in the past 24 months. After a brief boost in consumer demand in the run-up to the Nowruz holiday, the new orders sub-index also declined, falling to 29.34, the lowest level in two years. Iranian consumers may have saved-up to spend just before the holidays and their spending may now be further curtailed, diminishing sales prospects moving forward.
Rising producer prices also hit inventories, with the sub-index for raw materials and machinery inventories falling to a 17-month low at 41.64. The sub-index for the purchase price of raw materials and machinery jumped to 83.26, the highest level in six months.
The rising input costs may also be impacting export competitiveness of Iranian goods. The whole economy sub-index for exports sank to a 24-month low at 38.65.
Trends in the manufacturing sector were similar. Manufacturing PMI fell to a 24-month low at 37.02 as output fell. The manufacturing sub-index for output was 31.22, the lowest level in a year. Meanwhile, in a sign of fast-rising producer prices, the sub-index for the purchase price of raw materials and machinery rose to 84.55, the highest level in the last 18 months.
The outlook for businesses is turning more pessimistic as Iranian firms are exposed to rising prices in global markets, which may compound headwinds at home.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Esfand 1400 (February 20 - March 20)
Iran’s economy exhibited strong performance in the Iranian calendar month of Esfand (February 20 – March 20), but a long holiday period and continued uncertainty around the fate of the nuclear negotiations has dampened the economic outlook. ___STEADY_PAYWALL___
New purchasing managers’ index (PMI) data released by the Iran Chamber of Commerce showed the strongest economic performance in Iran in five months. Whole economy PMI reached 54.74.
The strong economic performance was underpinned by higher demand. The whole economy sub-index for new orders rose to 55.44, the highest rate in the past six months. Iranian producers and services firms had hoped that the Nowruz holiday would lead to a needed boost in consumer demand and raised output in turn. The whole economy sub-index for output reached 58.81.
Cost pressures are still being felt. The sub-index for the purchase price of raw materials and machinery reached 78.47, its highest rate over the past three months. Firms also cited an increase in minimum wage and rising food prices as a driver behind layoffs. The whole economy sub-index for employment fell to 44.82 percent, the lowest level in 17 months.
Similar dynamics could be seen in the manufacturing sector. Manufacturing PMI rose to 56.43, up nearly five points from the previous month. Strong demand was evident in new orders—the relevant sub-index rose to 59.92, the highest rate in 10 months. Relative stability in the foreign exchange market also gave an opportunity for manufacturers to replenish inventories. The sub-index for raw materials inventory rose to 51.60, indicating the first increase in inventories in two months.
On the other hand, the employment sub-index plummeted to its lowest rate over the past 23 months and dropped to 46.61. The chamber blamed the decline in employment on surging production costs.
Businesses expect a comedown as Iran enters a long holiday period that includes the Nowruz holidays and the holy month of Ramadan. The uncertain outcome of the Iran nuclear negotiations is also weighing on economic expectations. The whole economy sub-index for next month’s economic performance fell to 35.29, its lowest rate over the past two years. Looking to manufacturing PMI, the same sub-index fell to 34.80.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Bahman 1400 (January 21 - February 19)
Optimism and Anticipation
Iranian businesses are gearing up for a seasonal boom as demand ramps up ahead of the Nowruz holidays. ___STEADY_PAYWALL___
According to Purchasing Manager’s Index (PMI) data published by the Iran Chamber of Commerce, whole economy PMI rose to 51.55, the highest reading over the past four months.
The whole economy sub-index for output bounced to 55.70, up more than 8 points from the previous month on the back of higher output from the services and agricultural sectors.
Even as firms anticipate more demand, the impact on new orders remained minimal in the Iranian calendar month of Bahman (January 21 - February 19). The whole economy sub-index for new orders rose to 47.90, up from 43.14 in the previous month.
Continued uncertainty over the future of the Iran nuclear deal and the impact on the FX market still posed headaches for Iranian firms. For the fifth consecutive month, the sub-index for raw materials inventory remained below 50 at 47.29. However, with inflation easing some improvements can be seen in producer prices. The sub-index for the purchase price of raw materials and machinery fell to its lowest rate over the past 13 months at 73.65. The decline suggests the prices are rising at a slower pace.
Meanwhile, manufacturing PMI stood at 51.50, extending the sector’s run of expansion to six months. But the sector continues to face headwinds.
The sub-index for output fell to 50.57, its lowest rate over the past five months. Soft demand is reflected in the sub-index for new orders, which remained in contraction for the second consecutive month with a reading of 48.83.
Furthermore, continued volatility in the FX market and lack of liquidity continued to impact supplies of raw materials. The sub-index for raw materials inventory stood at 48.86, up from 46.21 in the previous month.
But with the coming of the Persian new year, optimism appears in order. The whole economy sub-index for the expectation of economic activity in the coming month stood at 61.77—its highest reading over the past four months. The manufacturing sub-index for economic expectations was 61.41.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Dey 1400 (December 22 - January 20)
Holding Out for Spring
Iran’s economic growth slowed in the Iranian calendar month of Dey (December 22 – January 20) according to new purchasing managers’ index (PMI) data from the Iran Chamber of Commerce. ___STEADY_PAYWALL___
Whole economy PMI fell to 46.94—a reading below 50 indicates that the economy is in contraction. Weak demand and reduced output were behind the slowing economic performance. The whole economy sub-index for new orders fell to 43.14, the lowest reading in the last six months. The sub-index for output fell to 47.07 in turn. Weak demand has troubled Iran’s economy since the summer, but researchers at the Iran Chamber of Commerce point to recent exchange rate volatility as an exacerbating factor.
A volatile foreign exchange market has also increased pressure on raw materials inventories. The relevant sub-index fell to 43.14, its lowest rate in six months.
The more negative economic outlook has seen employers cut back on hiring, responding in part to increased fuel costs. The whole economy sub-index slipped below 50 to settle at 49.91.
The manufacturing sector, usually the bright spot in Iran’s economy, also saw worse performance as manufacturing PMI fell to 50.31 on the back of weak demand and reduced output. The sub-index for new orders fell to 44.90, while the sub-index for output fell to 50.54.
Still, the economic outlook remains positive, according to those surveyed by the Iran Chamber of Commerce. The whole economy sub-index for expectations of economic activity stood at 61.62. Iranian firms appear to be hoping that the lead-up to the Persian new year, typically a time of higher consumer expenditures, will boost their prospects.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Azar 1400 (November 22 - December 21)
FX Market Headwinds
Volatility in Iran’s FX markets created headwinds for businesses in the Iranian calendar month of Azar (November 22 – December 21). Economic growth slowed according to the latest Purchasing Managers’ Index (PMI) data published by the Iran Chamber of Commerce. ___STEADY_PAYWALL___
During the month of Azar, whole economy PMI fell to 50.97. The sub-index for output fell 0.73 points to 53.13. The sub-index for new orders rose slightly to 48.00, up from 47.38 in the previous month. Still, with the PMI remaining below 50, demand for goods and services continued to contract for the second month in a row.
Across Iran’s economy, rising energy prices have created additional cost pressures for businesses. The sub-index for energy prices and consumption jumped to 67.88, its highest rate over the past 27 months. Businesses are being forced to react to weak demand and high production costs by curbing hiring—the employment sub-index dropped about 5 points to 48.74—and by opting not to increase prices to often rising production costs. The sub-index for the retail price of goods and services stood at 55.39, the lowest rate over the past 20 months.
The outlook in the manufacturing sector remained more positive than in other sectors of Iran’s economy. Manufacturing PMI fell 0.58 points but remained robust at 56.03. Notably, despite the FX volatility noted by the researchers at the Iran Chamber of Commerce, the sub-index for raw materials inventory rose above the threshold of 50 for the first time in seven months to reach 52.60.
The improvement in the availability of raw materials and other helped output remain robust, with the sub-index reaching 58.84, down less than half a point from the previous month. Orders continued to grow, but the sub-index dropped just over 4 points to reach 53.33, suggesting that weak demand continues to contribute to volatility in the sector’s economic performance.
Although businesses continue to believe economic conditions are set to improve, these factors are denting optimism about the business environment. The whole economy sub-index for the expectation future expectation of production and business activities fell to 56.03.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Aban 1400 (October 23 - November 21)
A Bounce in Manufacturing
Iranian economic growth slowed in the the Iranian calendar month of Aban (October 23 – November 21) according to new purchasing managers’ index (PMI) data released by the Iran Chamber of Commerce. ___STEADY_PAYWALL___
Whole economy PMI fell 3.7 points from the previous month to reach 51.07. A bounce in manufacturing activity saved the economy from slipping back into contraction as businesses in the services, agriculture, and housing sectors continue to struggle in the face of weak demand. The whole economy sub-index for new orders fell to 47.38, the lowest level in three months.
Business also cited headwinds from higher prices. The whole economy sub-index for the purchase price of raw materials and machinery was 83.13. Meanwhile, the sub-index for raw materials investor fell to 44.62, the lowest rate in the past seven months. Higher production costs are contributing to higher prices for finished goods and services, which in turn are serving to depress demand.
The outlook in the manufacturing sector was slightly more positive as manufacturing PMI rose a significant 6.3 points to reach 57.11. The sub-index for output rose 7.9 points to reach 59.25 as demand for manufactured goods outpaced demand for services. The sub-index for new orders rose 12 points to 57.36. Factories added jobs to boost output and the sub-index for employment rose to 56.10, its highest level in six months.
Still, raw materials inventories continued to contract with the sub-index remaining below 50 at 47.75. Expensive foreign exchange rates and liquidity challenges are contributing to shortages and higher input prices. The sub-index for the purchase price of raw materials and machinery reached 85.12, its highest level over the past 13 months. With temperatures dropping in Iran, many manufacturers are beginning to struggle with higher energy prices.
Despite these headwinds, continued economic expansion remains the expectation among Iranian business leaders. The whole economy sub-index for expected economic activity remained strong at 59.74.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Mehr 1400 (September 23 - October 22)
Growth That Isn’t Unbridled
Iran’s economy continued to grow during the Iranian calendar month of Mehr (23 September – 22 October), according to the latest release of purchasing manager’s index (PMI) data from the Iran Chamber of Commerce. ___STEADY_PAYWALL___
Whole economy PMI was 54.76, down slightly from the prior month’s reading of 55.55. Strong activity was seen in three sectors: services, agriculture, and construction. A drop in output in the manufacturing sector saw the whole economy output sub-index fall to 56.16, down from 57.64 in the prior month. Demand also softened as the sub-index for new orders fell to 55.16, down 2.3 points.
Raw materials prices continue to be a drag on growth, especially in the manufacturing and construction sectors. The sub-index for raw materials inventory dropped two points to slide back into contraction with a reading of 49.98.
The sub-index for employment fell to 47.84, the lowest level in 11 months, following seasonal changes in agriculture sector employment and a slowdown in job creation in the services sector.
The continued weakening in the rial contributed to an acceleration in the rise of producer prices. The sub-index for the purchase price of raw materials and machinery reached 83.52 during the month, its highest rate over the past year.
In the manufacturing sector, higher producer prices squeezed output while border closures hit export demand. As a result, manufacturing sector PMI fell to 50.83, down about 7 points, a significant drop. The output subindex fell to 51.31, down more than 10 points. The new orders fell compared to the previous month, with a sub-index reading of 45.22 compared to 58.93 in the prior month.
The exports sub-index reached its lowest level over the past six months at 43.57. The Iran Chamber of Commerce notes the impact of border closures between Iran and three of its neighbours, namely Afghanistan, Azerbaijan, and Armenia on export demand.
Persistent inflation continues to depress demand. The sales sub-index recorded a 12-point decrease and dropped to 46.53 during the month, a drop the Iran Chamber of Commerce attributes to “shrinking purchasing power.”
While high producer prices and constrained raw materials inventories have been constant challenge for Iranian manufacturers over the last three years, the impact of inflation on domestic demand appears to be a new hurdle for growth.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Shahrivar 1400 (August 23 - September 22)
Strong One-Month Performance
Iran’s economy returned to growth in the Iranian calendar month of Shahrivar (August 23 – September 22) according to new purchasing managers’ index (PMI) data published by the Iran Chamber of Commerce. ___STEADY_PAYWALL___
Whole economy PMI rose 8.96 points to 55.55, a new record for the index which launched two years ago. The improvement in economic activity was driven by a rise in output. The whole economy sub-index for output rose to 57.64, up over 17 points from the previous month as the economy moves past the summer’s electricity blackouts and COVID-19 lockdowns.
However, businesses continue to face significant cost pressures related to soaring raw material prices. The sub-index for the purchase price of raw materials declined slightly, but remained above 80. The continued slide of the rial and its concurrence with a period of high global commodities prices pose a challenge. The price increased being passed on to consumers are continuing to depress demand, although sales did return to growth with the sub-index reaching 57.64, the highest level over the last 6 months.
The rebound in economic growth was driven by the manufacturing sector. Manufacturing PMI rose more than 12 points to 57.66 as the sector returned to expansion. The output sub-index for the sector reached 61.96 while the new orders sub-index rose to 58.93, the highest rates recorded over the past four months.
Still, companies face supply chain bottlenecks. While the sub-index for raw materials inventories rose to 48.75 from 42.18 in the previous month, it remained below the crucial level of 50. The business climate remains challenging. Manufacturers reported concerns over export volumes as cost pressures and related price increases reduce the competitiveness of Iranian goods in international markets.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Mordad 1400 (July 23 - August 22)
A Summer to Forget
Iran’s economy edged back towards growth in the calendar month of Mordad (July 23 – August 22), according to new purchasing managers’ index (PMI) data published by the Iran Chamber of Commerce.
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Whole economy PMI rose to 46.59 from 44.64 in the previous month. But the outlook for the economy remained negative. Output fell sharply, with the sub-index falling to 40.41, an unusually low level for this time of year, despite summer holidays. Shutdowns related to COVID-19 were cited as a cause for the reduced output. Demand also remains weak with the sub-index for new orders registering a small increase to 43.89. Demand has been hit by continued economic uncertainty as the Raisi administration has yet to assert itself in economic planning. This uncertainty is reflected in part in the recent weakening of the rial.
The manufacturing sector, long the resource of Iran’s economic resilience, also struggled. Manufacturing PMI recorded a slight increase to 45.24. Again, declining output explains the sector’s poor performance. A combination of summer holidays at major factories and the COVID-19 related business shutdowns led hit production. Increased volatility in foreign exchange markets has led to cost pressures and constrained supply of raw materials. The sub-index for raw materials inventory fell to 42.18, the lowest level in the past 10 months. The sub-index for purchase price of raw materials and machinery jumped to 82.53 while the sub-index for the price of finished goods reached 60.01—the highest rates over the past four months.
However, respondents to the Iran Chamber of Commerce’s survey believe that the worst may be over. The sub-index for the expectations of economic activity in the coming month reached 65.98, the highest level so far this summer.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Tir 1400 (June 22 - July 22)
Blackouts Compounded by COVID-19
The latest Purchasing Managers’ Index (PMI) report published by the Iran Chamber of Commerce, covering the Iranian calendar month of Tir (June 22 – July 22), made clear the economic consequences of continued blackouts in Iran and a rising fifth wave of COVID-19 cases.
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Whole economy PMI fell to 44.62 from 51.27 in the prior month, meaning that the Iranian economy has returned to contraction, ending a 5 month period of growth.
The Iran Chamber of Commerce described the decline as a “sharp fall,” and pointed to COVID-19 related restrictions, recurring blackouts, returning weakness in Iran’s currency, and political uncertainty following the outcome of the Iranian presidential election. The whole economy sub-index fell to 44.93 in the face of reduced demand for goods and services. The new orders sub-index plummeted to 33.98, the second lowest rate recorded since the inception of the whole economy PMI reports.
The weakening of the Iranian rial over the month pushed the sub-index for the price of raw materials and machinery to 84.02, the highest figure in nine months.
One of the few bright spots was in the sub-index for employment, which saw a small increase to 54.87, as jobs continued to be added in the services and agricultural sectors.
Manufacturing PMI fell to 43.19, down from 54.21 in the previous month. The outlook for output, new orders, and raw materials inventories turned negative. Most concerning for the wider economy, the employment sub-index dropped to 47.86, breaking a 15-month streak during which the manufacturing sector added jobs.
While power outages had become less frequent, the COVID-19 caseload continued to mount towards the end of Tir. With a lockdown now in force, the outlook for Iran’s economy will remain negative for the near-term unless the government manages to reinstate the stability that had enabled Iran’s economic recovery in the first half of the year.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Khordad 1400 (May 22 - June 21)
Blackouts Hamper Growth
Recurring blackouts and constraints in the supply of raw materials hampered business activity in Iran during the calendar month of Khordad (May 22 - June 21), according purchasing managers’ index (PMI) data released by the Iran Chamber of Commerce.
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Given new headwinds, whole economy PMI fell to 51.27 from 53.78 in the previous month. While the economy is still growing, the PMI data indicates a fall in new orders, continued increases in the price of raw materials, and a drop in output likely related to recurring power cuts have hampered economic activity. The whole economy sub-index for output fell by over 6 points to 52.64. The whole economy sub-index for raw materials inventory fell to 45.73, its lowest rate in the past seven months.
While remaining in a growth phase, the manufacturing sector likewise saw a steep fall in economic activity. Manufacturing sector PMI fell nearly 9 points to 54.21. The sub-index for output fell to 53.64 from 68.68 in the previous month. Researchers at the Iran Chamber of Commerce blame the power cuts for interrupting output at manufacturing facilities.
The raw materials and machinery inventory sub-index declined to 47.52 from 53.59 a month earlier. Researchers at the Iran Chamber of Commerce cited import bottlenecks and an increase in the price of hard currency in Iran’s FX market as sources of pressure on raw materials inventories.
Despite the blackouts and supply constraints, businesses remain optimistic about the state of the economy. The whole economy sub-index for expectations of economic activity reached 63.78. Optimism is also reflected in the employment-related data. For the seventh straight month, the Iran’s manufacturing sector added jobs, with the employment sub-index at 55.93.
Whether this optimism is warranted depends on an end to the blackouts and no further deterioration in the availability and price of raw materials.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
Iran PMI Report - Ordibehesht 1400 (April 21 - May 21)
Clouds on the Horizon
Iran’s business climate continued to show sings of recovery during the calendar month of Ordibehesht (April 21 – May 21) according to Purchasing Managers’ Index (PMI) data published by the Iran Chamber of Commerce.
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Following the slowdown in the Iranian calendar month of Farvardin (March 21 – April 20), during which Whole Economy PMI fell to 39.65 due to the Nowruz holidays and lingering impact of COVID-19, the index reached 53.84 in Ordibehesht, the second highest level since the Iran Chamber of Commerce began tracking Whole Economy PMI. The sub-index for output reached 58.64, the highest level to date.
However, the sub-index for new orders declined to 49.80 in a sign of uncertainty around the impact of Iran’s presidential election, the fate of the nuclear negotiations, and the continued stability of Iran’s currency. The sub-index for raw materials prices was 76.25, indicating that production costs continue to rise. The sub-index for raw materials and machinery inventory stood at 49.49, registering a slight decline compared to the prior month. High production costs and continued inflation will continue to erode demand, which could slow the economic recovery in the coming months.
Strong performance in the manufacturing sector saw the whole economy sub-index for employment rise to 52.05, the highest level on record. Manufacturing PMI jumped to 63.00 while the new orders sub-index for the manufacturing sector rose to 61.81.
The sub-index for raw materials and machinery inventory reached 53.59, the highest rate recorded since the PMI report was first issued 32 months ago. The manufacturing sector continues to add jobs, with the sub-index for employment reaching 59.66.
At the time of the survey, manufactures were optimistic about further improvements in the business climate. The sub-index for expectations of economic activity was a healthy 60.66.
But the recently slowdown in the Vienna negotiations and the difficulties with electricity supply that have led to significant blackouts in Iran where highlighted as future risks by researchers at the Iran Chamber of Commerce which will likely be reflected in the forthcoming PMI data.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
PMI Report - Esfand 1399 (February 19 - March 20)
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Ending the Year on a High
The Iranian economy ended the year 1399 on a high according to Purchasing Managers’ Index (PMI) data published by the Iran Chamber of Commerce. Whole Economy PMI reached 54.73 while the sub-index for output rose to 58.39, the highest level registered to date.
The strong economic performance is related to higher consumer demand in the lead-up to the Nowruz holiday. The sub-index for sales jumped nearly 7 points to 60.30.
Manufacturing activity was also strong with Manufacturing PMI rising to 57.29 despite a small drop in output. The sub-index for output fell to 56.15 from 59.58 in the prior month. Manufacturers face continued challenges in managing inventories. The sub-index for raw materials and machinery inventory dropped to 49.42. Last month, the sub-index had surpassed the threshold of 50 for the first time in 29 months. The sub-index for raw materials purchases price also rose to 79.98.
Manufacturers are preparing for the seasonal lull in activity as the country moves into the long Norwuz holiday. The sub-index for expectations of economic activity in the coming month was 44.57. A continued rise in COVID-19 cases and the start of the Ramadan period are also expected to depress economic activity.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
