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Indonesia PMI October 2020

Indonesia: Manufacturing sector continues to deteriorate in October

The manufacturing Purchasing Managers’ Index (PMI) released by IHS Markit rose from 47.2 in September to 47.8 in October. As a result, the index remained below the 50-threshold, signifying worsening operating conditions and weighed on by lingering Covid-19 restrictions (referred to locally as PSBB).

October’s reading was driven by ongoing declines in output and new orders, albeit at slightly softer rates compared to the prior month. In addition, employment continued to fall as firms faced reduced demand. On the price front, input cost inflation picked up, although output prices fell as firms looked to spur demand.

Bernard Aw, principal economist at IHS Markit, stated:

“The impact of a loosening of the PSBB in mid-October may only be seen in November, but even then, the uncertainty of the pandemic trajectory as well as an absence of an effective vaccine, could keep demand and economic activity subdued in the coming months.”

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