PMI Report - Shahrivar 1399 (August 22 - September 21)
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Iran Passes Late Summer Doldrums but Bottlenecks Growing Worse
Iran’s manufacturing sector returned to expansion in the Iranian calendar month of Shahrivar (August 22 - September 21), moving past the late summer doldrums. But the wider economy remains in contraction as firms face worsening bottlenecks for the supply of raw materials.
The latest Purchasing Managers’ Index (PMI) report published by the Iran Chamber of Commerce indicates that Whole Economy PMI rose 0.43 points to reach 46.86. A PMI below 50 indicates economic contraction. Despite the nominal improvement in overall economic performance, the Whole Economy sub-index for raw material inventory fell to 35.64, down from 40.24 a month earlier. Part of the bottleneck is attributable to a slowdown in deliveries. The Whole Economy sub-index for the speed of supplier deliveries fell to 48.50 from 53.28.
The bottleneck continues to put upward pressure on prices. The Whole Economy sub-index for raw materials prices was 88.75, which the sub-index for prices of manufactured goods rose to 72.33. Pessimism is growing about when the bottleneck will ease and firms expect worse economic performance next month. The Whole Economy sub-index for expectations of economic output in the coming month falling significantly, down from 51.55 to 44.51.
As has been the case over the last 18 months, Iran’s manufacturing sector was again a bright spot for the economy, returning to expansion after the late summer blip. Manufacturing PMI rose 6.47 points to 54.53. Notable improvements could be seen in the sub-indexes for output (56.17), new orders (57.48), speed of supplier deliveries (56.72), and employment (53.17). But the trend around prices continues to be negative, with the sub-index for raw materials prices rising from 88.63 to 93.07.
Chinese exports to Iran have stabilized in recent months, but Iranian firms continue to report issues in their supply chains. This suggests that challenges in making timely payments may be responsible for the bottleneck as firms struggle to acquire the foreign currency needed to make payments—a likely consequences of turbulence in the foreign exchange rate.
Whole Economy PMI
Manufacturing PMI
Photo: Abed Mirmasoumi
