Indonesia: Manufacturing PMI falls slightly in June
The S&P Global Manufacturing Purchasing Managers’ Index (PMI) came in at 50.2 in June from 50.8 in May, marking the lowest figure in ten months. As a result, the index moved closer to the 50.0 no-change threshold, signaling a slower improvement in business conditions compared to the previous month.
Looking at the details of the release, June’s result was due to a marked slowdown in new orders and headcounts. Moreover, higher costs for raw materials and an increase in the VAT drove input costs up—pushing inflation up in turn. This, at the same time, led output charges to rise, as firms passed the burden on to customers. That said, output returned to expansionary territory amid improved demand and largely sustained activity. Moreover, sentiment regarding the coming months remained upbeat on expectations of improved demand ahead.
Commenting on the release, Laura Denman, economist at S&P Global Market Intelligence, stated:
“Price hikes remain a downside risk to growth, and should inflation continue to worsen domestic demand may be hit, which could mean the Indonesian manufacturing sector experiences a further loss of growth momentum.”