Sep 30

Sep 30 Iran PMI Report - Mordad 1400 (July 23 - August 22)

PMI, 2021, 2020

A Summer to Forget

Iran’s economy edged back towards growth in the calendar month of Mordad (July 23 – August 22), according to new purchasing managers’ index (PMI) data published by the Iran Chamber of Commerce.

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Whole economy PMI rose to 46.59 from 44.64 in the previous month. But the outlook for the economy remained negative. Output fell sharply, with the sub-index falling to 40.41, an unusually low level for this time of year, despite summer holidays. Shutdowns related to COVID-19 were cited as a cause for the reduced output. Demand also remains weak with the sub-index for new orders registering a small increase to 43.89. Demand has been hit by continued economic uncertainty as the Raisi administration has yet to assert itself in economic planning. This uncertainty is reflected in part in the recent weakening of the rial.

The manufacturing sector, long the resource of Iran’s economic resilience, also struggled. Manufacturing PMI recorded a slight increase to 45.24. Again, declining output explains the sector’s poor performance. A combination of summer holidays at major factories and the COVID-19 related business shutdowns led hit production. Increased volatility in foreign exchange markets has led to cost pressures and constrained supply of raw materials. The sub-index for raw materials inventory fell to 42.18, the lowest level in the past 10 months. The sub-index for purchase price of raw materials and machinery jumped to 82.53 while the sub-index for the price of finished goods reached 60.01—the highest rates over the past four months.

However, respondents to the Iran Chamber of Commerce’s survey believe that the worst may be over. The sub-index for the expectations of economic activity in the coming month reached 65.98, the highest level so far this summer.