Iran’s industrial sector remained under severe pressure in Farvardin 1405 (March 21–April 20, 2026), according to the latest Purchasing Managers’ Index report published by the Iran Chamber of Commerce Research Center. The industrial PMI stood at 37.4, one of the lowest readings recorded during the survey’s eight-year history and a clear sign that manufacturing activity continues to contract sharply. Although the index improved from the unprecedented level reached in Esfand 1404 (February 20–March 20, 2026), the latest figures suggest that industry remains trapped in a deep recession rather than moving toward recovery.
The report paints a picture of an economy still struggling with the consequences of the 40-day military conflict, disruptions to supply chains, trade restrictions and rising uncertainty. All major components of the industrial PMI remained below the neutral threshold of 50, indicating continued declines in production, demand, employment and business activity. The industrial PMI has now remained in contraction territory for five consecutive months, while the overall economy-wide PMI fell to 38.5, the lowest level recorded since the survey began.
According to the report, the rebound from the exceptionally low Esfand reading of 24.9 should not be interpreted as a sign of recovery. Instead, it reflects a slower pace of decline after an extraordinary shock. Industrial firms continue to operate in an environment characterized by logistical disruptions, restricted access to inputs, financial uncertainty and reduced operating capacity.
Production Slump
One of the clearest signs of weakness was the production index, which fell to 38.6. The reading was among the lowest observed during the survey period and indicates that a large share of manufacturers reported declining output. Businesses cited shortages of raw materials, import restrictions, war-related uncertainty and rising production costs as major obstacles. Producers in clothing and leather, chemicals, metals and food industries reported some of the weakest conditions.
Demand conditions also remained fragile. The index measuring new orders stood at 37.4, showing that both domestic and export-related demand remained weak. When new orders decline for an extended period, companies lose incentives to expand production, reinforcing the recessionary cycle. Weak sales, limited purchasing power and uncertainty about future economic conditions have continued to weigh on industrial activity.
Supply-side difficulties were equally visible. The supplier delivery index registered 39.6, indicating ongoing disruptions in logistics and procurement. Import limitations, financial transaction problems and internet outages slowed the movement of goods and increased business costs. At the same time, the inventory of purchased raw materials dropped to 32.6, one of the lowest levels on record. Restricted access to foreign currency, exchange-rate volatility and supply-chain interruptions have made it increasingly difficult for firms to secure essential inputs. The report warns that prolonged shortages could result in partial or complete production stoppages in coming months.
Mounting Pressures
The labor market has also been affected. The employment index fell to 36.8, the lowest reading in the industrial PMI’s eight-year history. Many companies have reduced shifts, limited operations or cut staff in response to falling demand and rising costs. The data suggest that recessionary pressures are increasingly being transferred from factory floors to workers, raising concerns about industrial employment and income prospects.
Meanwhile, inflationary pressures remain intense. The raw material purchase price index reached 77.4, showing that input costs continue to rise rapidly despite weak economic activity. Higher costs have squeezed profit margins and complicated production planning. Sales remained weak, with the sales index at 41.3 after six consecutive declines. Export performance also remained subdued, with the export index at 39.8, reflecting continuing trade disruptions and financial restrictions.
Another notable development was the decline in energy consumption, with its index at 40.7. Lower energy use often reflects reduced factory utilization, confirming that many producers remain far below normal operating levels.
Bleak Outlook
Business expectations provide little reason for optimism. The index measuring expectations for future production fell to 32.2, one of its weakest levels on record. Industrial managers remain concerned about uncertainty, foreign-exchange constraints, supply shortages and weak demand.
The data suggest that stabilizing access to foreign currency, facilitating imports, improving logistics and supporting working capital will be essential if Iran hopes to prevent a deeper industrial downturn and restore confidence across the manufacturing sector.
