Apr 13

Apr 13 Iran PMI Report - Esfand 1400 (February 20 - March 20)

PMI, 2022

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.