Iran’s manufacturing sector faced mounting pressure in the tenth month of the Iranian year 1404 (Dec. 22, 2025–Jan. 20, 2026), as the Purchasing Managers’ Index (PMI) dropped to 43, its lowest level in seven months since May–June 2025.
The latest survey signals a broad slowdown marked by shrinking demand, supply disruptions and rising production costs.
The PMI, compiled from monthly surveys of industrial purchasing managers, uses 50 as the neutral threshold. Readings below 50 indicate contraction in business activity. The overall economy index also stood at 43.4, pointing to continued weakness across sectors.
One of the most striking findings was the sharp decline in business expectations. The “future production expectations” index fell to 41, the lowest level recorded in the 88 months since the survey began in October 2018 (Sept. 23–Oct. 22, 2018).
Industrial managers reported greater pessimism about the outlook than during the 12-day military tensions in late May 2025 (May 22–June 2, 2025) or at the peak of the coronavirus outbreak in March–April 2020.
Demand conditions deteriorated significantly. The new orders index fell to 39, its weakest reading since March–April 2020, reflecting subdued domestic consumption and ongoing export constraints.
Internet disruptions in the latter half of the month further affected retail orders and trade flows. The production index declined to 41.2, pressured by shortages of raw materials, exchange-rate volatility and liquidity shortages.
Employment trends also remained fragile. The hiring index registered 47.3, marking the fifteenth consecutive month below the neutral level and signaling limited capacity among firms to maintain or expand their workforce.
Inventories of purchased raw materials stood at 42.5, underscoring continued supply-chain bottlenecks amid import restrictions and currency instability.
Input costs rose sharply, with the raw material purchase price index reaching one of its highest levels in recent periods.
Producers have begun adjusting selling prices accordingly, pushing the finished goods price index to its highest point since October 2018 (Sept. 23–Oct. 22, 2018).
Data from the Statistical Center of Iran show the Consumer Price Index reached 469.4 in the tenth month (Dec. 22, 2025–Jan. 20, 2026), up 7.9% compared to the previous month.
The slowdown has been widespread. Most industrial subsectors—including food products, textiles, machinery, household appliances and automotive—reported readings below 50.
Business groups have called for exchange-rate stability, improved access to foreign currency and targeted liquidity support to help restore predictability and stabilize industrial activity.
