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Indonesia PMI November 2020

Indonesia: Manufacturing PMI picks up in November

The manufacturing Purchasing Managers’ Index (PMI) released by IHS Markit rose from 47.8 in October to 50.6 in November. As a result, the index moved above the 50-threshold, signifying improving operating conditions and likely supported by the loosening of Covid-19 restrictions (referred to locally as PSBB) in Jakarta in mid-October.

November’s reading was driven by a record rise in output and higher—albeit marginally—new orders. However, employment continued to decline. On the price front, input cost inflation picked up, although the corresponding increase in output prices was moderate.

Bernard Aw, principal economist at IHS Markit, stated:

“The move to transitional PSBB provided a boost to Indonesia’s manufacturing sector midway through the fourth quarter, with PMI data indicating an improvement in business conditions during November. [However] the subdued upturn in sales, and a further marked drop in backlogs of work, suggest that the strong output expansion was connected to manufacturers working through previously-placed orders. Firms remained reluctant to invest in new capacity and inventories, with factory employment and purchasing activity both contracting at solid rates.”

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