S&P PMI Of Indonesia Manufacturing Still Below 50 For Four Consecutive Months

, 03 Nov 2024

By ferry@insightinnews.com S&P Global reported that Indonesia's Manufacturing Purchasing Manager's Index (PMI) continued to decline in October 2024, standing at 49.2. This figure has remained unchanged since September 2024. Consequently, the PMI has been below the critical level of 50.0 for four consecutive months. Paul Smith, Economics Director at S&P Global Market Intelligence, stated that Indonesia's manufacturing sector is still contracting due to decreases in production, new orders, and employment since September 2024. "Panelists often note that market activity is sluggish, sometimes linked to geopolitical uncertainties that make clients cautious and inactive," Paul wrote in the S&P Global report on Friday, November 1, 2024. Additionally, S&P Global revealed that output and new orders slightly declined in October, extending the current downturn that has persisted for four months. Panelists observed a drop in market demand, with clients' purchasing power reported to be decreasing. This trend is evident in both domestic and international markets, with geopolitical uncertainties leading to an eight-month decline in new export orders. The weak business conditions have prompted companies to reduce staffing levels in their factories, averaging three cuts in the last four months. Although employment has decreased slightly, backlogs of work have fallen for five consecutive months, with the fastest decline since January 2021. The company was able to complete its tasks, but it also showed that finished goods inventory rose unintentionally due to a drop in market demand for four consecutive months. Meanwhile, purchasing activity continued to decline, extending the current downturn to four months. This recent decline is linked to weak trends in new demand and production. Nevertheless, the company is optimistic that market conditions will stabilize and geopolitical uncertainties will lessen in the coming months. The company anticipates that operating conditions will improve in the next year and hopes to benefit from a more stable macroeconomic environment to boost business activity in the upcoming months.

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