Growth of Manufacturing Activity in Indonesia Eased in May 2017
Growth of manufacturing activity in Indonesia eased in May 2017. The Nikkei Indonesia Manufacturing Purchasing Managers' Index (PMI) dropped to 50.6 in May from a reading of 51.2 in the preceding month. Last month manufacturing activity in Indonesia had hit a 10-month high, hence the lower reading indicates a loss of growth momentum for Indonesia's manufacturing sector. However, it remained comfortably above the boom-or-bust line of 50.0 that separates expansion from contraction.
Growth of new orders slowed compared to April 2017, thereby hampering production growth in Indonesia and preventing some companies from adding more employees. Concurrently, optimism towards the future performance of Indonesia's manufacturing sector weakened. However, good news is that new export business grew (at the strongest pace since September 2016) amid improving international trade. Meanwhile, charge inflation softened in line with cooler cost inflationary pressures.
Pollyanna De Lima, Economist at IHS Markit, commented:"Although the Indonesian manufacturing economy hit a softer patch in May, some survey indices indicate that the slowdown is likely to be temporary. On the downside, we saw feeble expansions in new business and output relative to the recent highs noted in April. More positively, firms purchased inputs at the strongest rate in nine months and mentioned that production growth was stymied by shortages of raw materials. While unable to scale up output as much as desired in May, the recent upswing in buying levels should prevent the same outcome in the near - term. Also noteworthy, there was a pick - up in the pace at which new orders from abroad increased.
Manufacturing PMI Indonesia:
