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Indonesia manufacturing PMI hits 13-month low
A slower growth rate was recorded for new orders and output.
Indonesia experienced a decline in its manufacturing purchasing managers' index (PMI), plunging to its lowest level in 13 months in June 2024 even as companies recorded a slower growth rate for both new orders and output.
Based on a survey of purchasing executives from approximately 400 manufacturing firms to assess business conditions, the PMI report by S&P Global revealed that Indonesia's PMI dropped by 1.4 points to 50.7 in June, the lowest since May 2023.
Despite this decline, June 2024 marked the 34th consecutive month of expanding factory activity, with scores remaining above the 50-point threshold that separates expansion from contraction.
Trevor Balchin, the economics director at S&P Global Market Intelligence, expressed concerns about the loss of momentum in the Indonesian manufacturing sector in June.
He highlighted the almost stagnation in new order growth and the decline in exports for the fourth consecutive month as major contributing factors.
Production outpaced new orders in June, leading to a decrease in backlogs for the first time since November 2023.
Additionally, finished goods stock declined for the first time since January, and input stocks rose at the slowest rate since November 2022, with local manufacturers attributing it to the depreciation of the Indonesian rupiah against the US dollar and higher diesel prices.
The report also mentioned that lower confidence in future orders hindered employment growth in June, keeping it relatively stable compared to the previous month. Balchin noted the possibility of a decline in new orders at the beginning of the second half of the year, potentially marking the second contraction since mid-2021.
