Indonesia: Manufacturing PMI falls below threshold in July
The S&P Global Indonesia Manufacturing Purchasing Managers’ Index (PMI) fell to 49.3 in July from 50.7 in the previous month. As a result, the index moved below the 50.0 no-change threshold, signaling a deterioration in manufacturing-sector operating conditions compared to the previous month.
July’s weaker reading stemmed from the first decline in new orders in over a year amid sluggish market demand, coupled with contracting output. Production capacity was negatively affected by supply-side constraints, including delays in shipping and extended lead times for input deliveries. Employment also saw a slight drop, with the reduction in staffing volumes the steepest in nearly three years.
Regarding prices, input price inflation cooled in July, though it remained elevated due to higher raw material costs and a weaker rupiah. In response, manufacturers raised their output charges at the strongest pace in three months. Despite these challenges, confidence regarding future output improved to its highest level since February, driven by expectations of an upturn in sales volumes and strengthening market conditions over the next year.