Indonesia: Manufacturing PMI falls to 14-month-low October
November 3, 2014
The manufacturing Purchasing Managers’ Index (PMI) decreased from 50.7 in September to 49.2 October, according to a release provided by HSBC. The result reversed the improvement seen in September and marked the lowest level since August 2013. The index is now back below the 50-threshold, which indicates contraction in the manufacturing sector.
October’s figure reflects a deterioration in terms of both output and new orders. Output fell in line with the headline figures, dropping to the lowest level in 14 months. New orders declined for the second time in three months. Export orders were also down in October amid weakening demand from key foreign clients. Due to the fall in production and demand, manufacturers decreased their purchasing activity. Moreover, the level of employment was down for a third consecutive month.
According to HSBC, “Indonesian manufacturing activity continues to waver. While the contraction in the PMI in October was not sharp, conditions are clearly on the weak side. The only indices that are still rising - and in fact accelerating - are prices. Input prices continue to rise faster than output prices, suggesting ongoing margin pressures for manufacturers. With both new orders and new export orders looking soft, and work backlogs down for a fifth straight month, the outlook for the sector remains tepid.”
Author: Carl Kelly, Economist