Nov 15

Nov 15 Iran PMI Report - Mehr 1400 (September 23 - October 22)

PMI, 2021

Growth That Isn’t Unbridled

Iran’s economy continued to grow during the Iranian calendar month of Mehr (23 September – 22 October), according to the latest release of purchasing manager’s index (PMI) data from the Iran Chamber of Commerce. ___STEADY_PAYWALL___

Whole economy PMI was 54.76, down slightly from the prior month’s reading of 55.55. Strong activity was seen in three sectors: services, agriculture, and construction. A drop in output in the manufacturing sector saw the whole economy output sub-index fall to 56.16, down from 57.64 in the prior month. Demand also softened as the sub-index for new orders fell to 55.16, down 2.3 points.

Raw materials prices continue to be a drag on growth, especially in the manufacturing and construction sectors. The sub-index for raw materials inventory dropped two points to slide back into contraction with a reading of 49.98.

The sub-index for employment fell to 47.84, the lowest level in 11 months, following seasonal changes in agriculture sector employment and a slowdown in job creation in the services sector.

The continued weakening in the rial contributed to an acceleration in the rise of producer prices. The sub-index for the purchase price of raw materials and machinery reached 83.52 during the month, its highest rate over the past year.

In the manufacturing sector, higher producer prices squeezed output while border closures hit export demand. As a result, manufacturing sector PMI fell to 50.83, down about 7 points, a significant drop. The output subindex fell to 51.31, down more than 10 points. The new orders fell compared to the previous month, with a sub-index reading of 45.22 compared to 58.93 in the prior month.

The exports sub-index reached its lowest level over the past six months at 43.57. The Iran Chamber of Commerce notes the impact of border closures between Iran and three of its neighbours, namely Afghanistan, Azerbaijan, and Armenia on export demand.

Persistent inflation continues to depress demand. The sales sub-index recorded a 12-point decrease and dropped to 46.53 during the month, a drop the Iran Chamber of Commerce attributes to “shrinking purchasing power.”

While high producer prices and constrained raw materials inventories have been constant challenge for Iranian manufacturers over the last three years, the impact of inflation on domestic demand appears to be a new hurdle for growth.