Jan 6

Jan 6 Iran PMI Report - Azar 1400 (November 22 - December 21)

PMI, 2021

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.