Indonesia: Manufacturing PMI falls to record low in February
March 2, 2015
The manufacturing Purchasing Managers’ Index (PMI) ticked down from 48.5 in January to 47.5 in February, according to a release provided by HSBC. February’s result marked the lowest level on record. Moreover, the index is below the 50-threshold, which indicates contraction in the manufacturing sector.
February’s figure reflected a fifth straight contraction in both output and new orders, with both falling at the fastest rate in nearly four years. Weak demand domestically, due to high prices and from abroad, were a drag on production and orders. Latest data show that input costs rose during the latest period, with a strong U.S. dollar pushing up the price of imported inputs. Manufacturers cut their purchasing activity the most in 18 months. Moreover, the decrease in production and demand led to a seventh consecutive fall in employment levels.
According to HSBC, “as new orders fell at a survey-record pace, reflective in part of rising prices negatively weighting on demand, the near-term outlook for the sector remains a little underwhelming. Accordingly, manufacturers responded by cutting their staffing levels further during February.”
Author: Carl Kelly, Economist