Indonesia PMI

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Indonesia: Manufacturing PMI remains in contraction territory in January

February 2, 2015

The manufacturing Purchasing Managers’ Index (PMI) ticked up from 47.6 in December to 48.5 in January, according to a release provided by HSBC. December’s result had marked the lowest level on record. Despite the improvement, the index is still below the 50-threshold, which indicates contraction in the manufacturing sector.

January’s figure reflected a fourth straight contraction in both output and new orders. New orders contracted at a notably sharp rate, with a lack of international demand dragging down new export business in particular. Moreover, the decrease in production and demand led to a sixth consecutive fall in employment. The recent fuel price hike and a depreciating rupiah also caused input prices to remain well above average.

According to HSBC, “manufacturing activity has started the year on a soft note, not surprising considering that the PMI has generally been weakening since August 2014. Weak external demand continues to pose the largest drag, with the new export orders’ sub-component falling to a record low in January. Nevertheless, there are still signs that, while manufacturing sector conditions are likely to remain soft in the coming months, the sector is stabilizing.”

FocusEconomics Consensus Forecast panelists see manufacturing rising 5.3% in 2015, which is down 0.2 percentage pointsfrom the previous month’s estimate. For 2016, the panel expects manufacturing to increase 5.8%.


Author:, Economist

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Indonesia PMI January 2015

Note: HSBC Indonesia Manufacturing Purchasing Managers’ Index. Readings above 50 indicate an expansion in the manufacturing sector while readings below 50 indicate a contraction.
Source: HSBC and Markit.


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