PMI Report - Azar 1399 (November 21 - December 20)
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Demand-Side Underwhelms, Supply-Side Improves
New purchasing managers’ index data compiled by the Iran Chamber of Commerce indicates that Iran’s economic recovery is continuing and economic actors are increasingly confident about short-term prospects.
In Iranian calendar month of Azar (November 21 – December 20), Whole Economy PMI rose 2.07 points from the previous month to reach 47.77. Meanwhile, Manufacturing PMI rose 1.67 points to reach 49.30, registering just below a return to expansion. Despite improvements in both indicators, the economy remains stagnant, but there are positive signs in both the wider economy and the manufacturing sector.
The Whole Economy PMI sub-index for employment reached 51.30, its highest rate since the start of the Iranian calendar year. This was just the second month this year that the sub-index was above 50, indicating that the economy added jobs.
Additionally, the sub-index for the purchase price of raw materials declined to 76.64, continuing a positive trend linked to the greater stability in the value of the Iranian rial over the last few months and a decline in the monthly inflation rate. With a sharp rise of 6.29 points over the previous month, the sub-index for raw materials inventories reach 46.13, the highest level in over a year.
Economic actors report continued to believe in Iran’s economic recovery, with the Whole Economy PMI sub-index for expectations for economic activity in the coming month reaching 56.38, the highest level in seven months.
While the manufacturing sector remained in contraction in Azar, the primary cause appears to have been still depressed demand, rather than the supply chain vulnerabilities that were responsible for the downturn in the manufacturing sector earlier in the year.
The Manufacturing PMI sub-index fell to 43.51, indicating the second month in a row of weak demand. But should demand pick-up, manufacturers will be in position to fulfill orders. The sub-index for raw materials inventory reached 48.92, one of its highest rates over the past two years. This suggests the supply-chain bottlenecks and the high input prices are easing.
Meanwhile, the manufacturing sector added jobs, with the sub-index for employment rising from 49.43 in the previous month to 51. Confidence in the sector remains high—the sub-index measuring expectations for economic activity in the coming month reached 58.22. Should inflation continue to ease thereby boosting consumption, the manufacturing sector’s recovery will likely consolidate.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
