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Indonesia PMI August 2020

Indonesia: Manufacturing conditions improve in August

The manufacturing Purchasing Managers’ Index (PMI) released by IHS Markit rose from 46.9 in July to 50.8 in August amid an easing of Covid-19 restrictions. As a result, the index moved above the 50-threshold for the first time since February, signifying improving operating conditions.

August’s reading was driven by the fastest growth in output and new orders for six years. Less positively, new exports continued to fall sharply, while employment also declined. On the price front, input cost inflation was marked, although the uptick in output prices was more modest, as firms looked to spur demand.

Bernard Aw, principal economist at IHS Markit, stated that the latest data “add[s] to signs that the economy should see a stronger rebound after the collapse in the second quarter.” However, Aw goes on to say: “Other survey indicators such as backlogs of work and employment continue to warn of downside risks to the outlook. The concern is that the recovery stems primarily from the release of pent-up demand brought about by the lockdown measures and could falter after the initial rebound.”

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