Feb 13

Feb 13 Iran PMI Report - Dey 1401 (December 22 - January 20)

PMI, 2022

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.