Indonesia’s manufacturing sector shrinks to 49.3 in July

The seasonally adjusted S&P Global Indonesia Manufacturing Purchasing Manager’s Index (PMI) fell to 49.3 in July from 50.7, indicating a decline in operating conditions.

This was the first time the PMI dropped below 50 since August 2021, reflecting modest decreases in output and new orders due to sluggish market demand. New export sales also declined, partly due to shipping delays.

Paul Smith, Economics Director at S&P Global Market Intelligence, said: “A general market slowdown underpinned a marginal deterioration in operating conditions during July, with new orders declining and production down for the first time in over two years. Caution was therefore exercised by manufacturers, with purchasing activity cut slightly and employment dropping at the fastest rate since September 2021. Supply-side constraints added to firms’ woes, with average lead times lengthening on the back of ongoing maritime shipping challenges.
“There is some hope however that growth will return soon, with firms at their most confident since February amid hopes that sales and market conditions will pick up over the year ahead.”

Attribution: S&P Global Indonesia Manufacturing PMI