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Indonesia: Manufacturing PMI falls in September, remains in contractionary territory

October 1, 2015

The manufacturing Purchasing Managers’ Index (PMI) fell from 48.4 in August to 47.4 in September, according to a release provided by Nikkei. The result continues to signal deteriorating conditions in the manufacturing sector. The index has been below the 50-threshold, which indicates contraction in the manufacturing sector, since September of last year.

September’s figure was driven by the 12th straight contraction in both output and new orders. Production decreased the most since June and new orders the most since July. Subdued confidence, the challenging domestic economic environment and weak global demand, particularly in Asia, dragged on production and new orders. Lower production and new work requirements led manufacturers to reduce their input purchasing activity and employment levels in September. Staffing levels have declined for 14 straight months, with September’s loss the second-greatest on record. Meanwhile, the depreciating rupiah continues to push up the price for imported inputs.

According to Nikkei, “dismal PMI data for Indonesia show sharper declines in new work, employment and production at the end of Q3. Manufacturers struggled to secure new work amid a difficult economic climate and production was scaled back again. The sector’s employment situation is alarming; with job shedding in September accelerating to a pace broadly similar to July’s survey record.”

FocusEconomics Consensus Forecast panelists see manufacturing rising 5.3% in 2015, which is down 0.2 percentage points from the previous month’s estimate. For 2016, the panel expects manufacturing to increase 5.8%.


Author:, Economist

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Indonesia PMI September 2015

Note: Nikkei Indonesia Manufacturing Purchasing Managers’ Index. Readings above 50 indicate an expansion in the manufacturing sector while readings below 50 indicate a contraction.
Source: Nikkei and Markit.


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