Indonesia: Manufacturing sector loses steam in September amid renewed restrictions
The manufacturing Purchasing Managers’ Index (PMI) released by IHS Markit fell from 50.8 in August to 47.2 in September amid a tightening of Covid-19 restrictions in response to elevated infection rates. As a result, the index moved below the 50-threshold, signifying worsening operating conditions.
September’s reading was driven by declines in output and new orders, while employment continued to fall. On the price front, input cost inflation dimmed, and the uptick in output prices was modest as firms looked to spur demand.
Bernard Aw, principal economist at IHS Markit, stated:
“Large-scale social restrictions (PSBB) were reimposed in Jakarta, dealing a setback to the Indonesian manufacturing recovery […] Whether a robust recovery will take root depends to a large extent on the country’s ability to bring the pandemic under control. Expectations about the year-ahead outlook remain positive, but optimism hinges on an improvement in the Covid-19 situation.”