Aug 19

Aug 19 Iran PMI Report - Tir 1400 (June 22 - July 22)

PMI, 2021, 2020

Blackouts Compounded by COVID-19

The latest Purchasing Managers’ Index (PMI) report published by the Iran Chamber of Commerce, covering the Iranian calendar month of Tir (June 22 – July 22), made clear the economic consequences of continued blackouts in Iran and a rising fifth wave of COVID-19 cases.

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Whole economy PMI fell to 44.62 from 51.27 in the prior month, meaning that the Iranian economy has returned to contraction, ending a 5 month period of growth.

The Iran Chamber of Commerce described the decline as a “sharp fall,” and pointed to COVID-19 related restrictions, recurring blackouts, returning weakness in Iran’s currency, and political uncertainty following the outcome of the Iranian presidential election. The whole economy sub-index fell to 44.93 in the face of reduced demand for goods and services. The new orders sub-index plummeted to 33.98, the second lowest rate recorded since the inception of the whole economy PMI reports.

The weakening of the Iranian rial over the month pushed the sub-index for the price of raw materials and machinery to 84.02, the highest figure in nine months.

One of the few bright spots was in the sub-index for employment, which saw a small increase to 54.87, as jobs continued to be added in the services and agricultural sectors.

Manufacturing PMI fell to 43.19, down from 54.21 in the previous month. The outlook for output, new orders, and raw materials inventories turned negative. Most concerning for the wider economy, the employment sub-index dropped to 47.86, breaking a 15-month streak during which the manufacturing sector added jobs.

While power outages had become less frequent, the COVID-19 caseload continued to mount towards the end of Tir. With a lockdown now in force, the outlook for Iran’s economy will remain negative for the near-term unless the government manages to reinstate the stability that had enabled Iran’s economic recovery in the first half of the year.