This is also a good omen for economic growth in the second quarter of the year. It is widely assumed that Indonesia will exit the economic recession in Q2-2021.

However, before becoming too optimistic, we need to be aware that these PMI data come in the form of a month-on-month (m/m) comparison. As such, solid growth compared to March 2021 does not mean that we are back at levels of manufacturing activity seen in pre-COVID-19-crisis days. On the contrary, manufacturing activity remains far from the ‘normal’ levels. What the PMI chart of Indonesia above actually shows is a relatively mild recovery compared to the massive declines in April-June 2020. This may also explain why manufacturing companies are still reluctant to hire additional staff, leaving employment levels broadly unchanged (despite the sharp rise in new orders). As a result, backlogs of work rose for the second month running, and at a solid pace that was the most marked in more than eight years.


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