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Indonesia: Manufacturing PMI hovers in contractionary territory in October

November 2, 2015

The manufacturing Purchasing Managers’ Index (PMI) inched up from 47.4 in September to 47.8 in October, 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.

October’s figure was driven by the 13th straight contraction in both output and new orders. Production decreased at a sharp rate and new orders were down the most since July. New orders from abroad contracted at the second-fastest pace in the survey’s history. Weak domestic and global demand are dragging on output and new business flows. Lower production and new work requirements led manufacturers to reduce their input purchasing activity and employment levels in October, albeit at a slower pace than in previous months. Staffing levels have declined for 15 straight months. Meanwhile, the weak rupiah continues to push up the price for imported inputs, although overall inflation rates cooled in October.

According to Nikkei, “Indonesia’s manufacturing downturn was extended into October. Further declines in new projects have hindered production as well as firms’ ability to add to their workforce numbers. The downwards trend was also fueled by a plunge in export business.”

FocusEconomics Consensus Forecast panelists see manufacturing rising 4.7% in 2015, which is up 0.1 percentage points from the previous month’s estimate. For 2016, the panel expects manufacturing to increase 4.8%, which is down 0.2 percentage points from last month’s forecast.


Author:, Economist

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Indonesia PMI October 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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