Indonesia: Manufacturing conditions deteriorate at softer pace in July
August 3, 2020
The manufacturing Purchasing Managers’ Index (PMI) released by IHS Markit rose from 39.1 in June to 46.9 in July amid an easing of Covid-19 restrictions. However, the reading was still below the 50-threshold signifying a worsening in operating conditions.
July’s reading was driven by softer falls in production, new orders and employment. On the price front, input cost inflation was marked, although the uptick in output prices was more modest, as firms were faced with still-weak demand.
According to Bernard Aw, Principal Economist at IHS Markit:
"PMI data showed another marked easing in the downturn across Indonesia's manufacturing sector during July, adding to hopes that the worst of the impact of the COVID-19 pandemic was felt in the second quarter. […] However, the survey also points to a challenging recovery ahead. […] The need for ongoing social distancing at workplaces and public gatherings, as well as any potential surge in new infections, could also further delay output and sales from recovering to pre-pandemic levels.”