Indonesia's Manufacturing Sector: Contracting for 17 Straight Months
For the 17th straight month Indonesia's manufacturing sector contracted. Based on the latest survey from Nikkei, the Indonesia Manufacturing Purchasing Managers' Index (PMI) showed a reading of 48.7 in February 2016, slightly down from a reading of 48.9 in the preceding month (a reading below 50 indicates that manufacturing activity has contracted). It confirms that both global and domestic growth remained subdued in the first months of 2016, hence new orders continued to decline, while unemployment rose.
However, Pollyanna De Lima, Economist at Markit, also had a positive message. A rebound may occur soon as she detected a moderation in the rate of contraction in output. It is also positive that Bank Indonesia cut its benchmark interest rate (BI rate) by 0.25 percent to 7.00 percent at its February policy meeting. More interest rate cuts this year would support a rebound in Indonesia's manufacturing sector.
Across most of Asia manufacturing activity shrank in February.
Indonesia Manufacturing PMI