PMI Report - Mehr 1399 (September 22 - October 21)
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Is Iran’s Economy at a Turning Point?
The Iranian calendar month of Mehr (September 22 - October 21) saw the highest level of monthly inflation in two years, with the Consumer Price Index rising 7 percent following several weeks of significant volatility in foreign exchange markets. As detailed in the latest Purchasing Managers Index report published by the Iran Chamber of Commerce, this volatility had a directly impact on overall economic activity in Iran.
Whole Economy PMI declined 2.39 points to 44.47. Rising prices have hit the services sector as households cut back on consumption. The seasonal slowdown in agricultural activity also contributed to the weaker performance for the economy at large.
Iran’s manufacturing sector continued to experience growth, with Manufacturing PMI registering at 52.22. There were improvements across the sub-indices for output, the speed of supplier deliveries, new orders, and employment. However, the sub-index for raw materials inventory fell by a significant 3.55 points to reach 37.46, while the sub-index for raw materials prices reached 94.82, the highest level in the two years that this data has been collected. Notably, the sub-index for raw materials inventory has not exceeded 50 at any point in the last two years. It is the only major sub-index to demonstrate this kind of sustained weakness.
Iranian manufacturing firms are also reporting higher prices for manufactured goods, indicating that these price increases are being passed-on to customers, further increasing inflation.
The Mehr report marked the final set of PMI data prior to the US election. Companies surveyed for the report by the Iran Chamber of Commerce relayed that the election might be expected to have a positive impact on business activity in Iran. Joe Biden’s victory already appears to have had a positive impact on foreign exchange markets. Should inflation slow in the coming months, we can expect the recovery to pick up, first in the manufacturing sector and subsequently in the wider Iranian economy.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
