Indonesia: Manufacturing PMI falls in June, but remains above threshold
The S&P Global Indonesia Manufacturing Purchasing Managers’ Index (PMI) fell to 50.7 in June from May’s 52.1. As a result, the index remained above the 50.0 no-change threshold, but signaled a softer improvement in manufacturing-sector operating conditions compared to the previous month.
The decrease in the PMI was primarily due to growth of both output and new orders slowing to the weakest in 13 months; weak export sales contributed to a decline in order books for the fourth consecutive month, hurting overall demand and dampening employment. In turn, this weaker demand led Indonesian manufacturers to reduce their backlogs of work for the first time since last November, and stocks of finished goods fell at the steepest rate since July 2022. Input purchasing also slowed, reflecting a broader loss of momentum in the manufacturing sector’s growth.
Regarding prices, input inflation remained sharp, driven by a weak rupiah and higher diesel prices, although it eased slightly from May. In contrast, output prices increased at a modest pace. Meanwhile, business expectations for the next 12 months remained positive, buoyed by prospects of new projects, new customers, and supportive government policies. However, the degree of optimism was unchanged from May and remained among the lowest recorded.