Indonesia: Manufacturing PMI picks up in December, but remains in contractionary territory
January 2, 2020
The manufacturing Purchasing Managers’ Index (PMI) released by IHS Markit increased to 49.5 in December from 48.2 in November, marking the highest reading since July. However, the index remained below the 50-threshold that signifies deteriorating operating conditions. The overall picture is of a manufacturing sector struggling against a backdrop of subdued global economic momentum.
December’s reading came amid a rebound in output and new orders, although employment and export orders fell. Price pressures were subdued; although input prices rose slightly, output prices fell at a survey-record rate amid competition and weak demand.
Bernard Aw, Principal Economist at IHS Markit, commented:
"The return to growth of output, new orders and input inventories indicated that a recovery could be around the corner [ …] However, any hopes of a strong pick-up in factory activity need to be tempered as other survey indicators, including falling backlogs, lower employment and muted inflation, suggest that the road to recovery remains challenging amid a global slowdown. In particular, there were reports that subdued sales and shipment delays led to a further accumulation of inventories."
Author: Oliver Reynolds, Economist