Indonesia: Manufacturing conditions deteriorate in July
August 1, 2019
Conditions in Indonesia’s manufacturing sector worsened in July, according to the Purchasing Managers’ Index (PMI) released by IHS Markit and Nikkei, with the PMI decreasing from 50.6 in June to 49.6. As a result, the index moved below the 50-point threshold that separates expansion from contraction in the manufacturing sector for the first time since January.
July’s drop was underpinned by shrinking production, employment and purchasing activity, amid soft new orders. On the price front, input price inflation was modest, while output prices were largely unchanged.
Bernard Aw, Principal Economist at IHS Markit, puts July’s gloomy figures into perspective: “the July PMI is still indicative of manufacturing helping drive the annual pace of economic growth of just over 5%. Encouragingly, firms remained optimistic about the business outlook for the year ahead […] suggesting that the current soft patch could be temporary."
Author: Oliver Reynolds, Economist