Below is a list with tagged columns and company profiles.
Latest Reports Manufacturing
On Wednesday (05/08/2020) Indonesia Investments released the July 2020 edition of its monthly report. In this edition, titled 'A Modest Rebound', we discuss the impact of the COVID-19 crisis on the Indonesian economy, Indonesia's automotive industry, and a range of other topics.
Indonesia’s latest manufacturing data showed that the contraction in manufacturing activity has continued in June 2020, but the level of contraction was not as bad as in the past two months. This is in line with our forecast as the Indonesian government gradually allowed the Indonesian economy to reopen in June 2020.
As expected, Indonesia’s manufacturing activity contracted again in May 2020, albeit at a slightly slower pace. The latest IHS Markit Indonesia Manufacturing Purchasing Managers’ Index (or PMI) rose to a reading of 28.6 points in May 2020, up from the all-time low of 27.5 in April 2020. A reading below 50.0 indicates contraction in the country’s manufacturing activity, while a reading above 50.0 indicates expansion.
Never before did Indonesia’s manufacturing activity collapse so badly in the nine-year history of the IHS Markit Indonesia Manufacturing PMI than in April 2020. The IHS Markit Indonesia Manufacturing Purchasing Managers’ Index (PMI) plunged to a reading of 27.5 in April 2020 (from 45.3 in the preceding month). It is not only the steepest fall but also the lowest level of operating conditions ever touched since the survey started back in April 2011.
We were quite surprised to see Indonesia’s latest manufacturing data. From July 2019 to January 2020 Indonesia’s manufacturing activity contracted (seven consecutive months!). Subdued global economic growth and the tariff war between the United States and China were the key reasons for these weak conditions in Indonesia’s manufacturing sector.
As expected, Indonesia experienced a weak start of the year in terms of its manufacturing activity. The IHS Markit Indonesia Manufacturing Purchasing Managers’ Index (or PMI) was recorded at 49.3 in December 2019 (remaining stubbornly below the 50.0 level that separates contraction from expansion in the manufacturing sector). The latest PMI figure is also a slight decline from 49.5 in the preceding month.
For the sixth straight month manufacturing activity in Indonesia remained in the red zone. It therefore was a very disappointing second half of 2019. Moreover, it raises room for concern about Indonesia’s overall economic growth in 2019.
For the fifth straight month manufacturing activity in Indonesia remained in the red zone, implying that the fourth – and last – quarter of 2019 is bound to be a disappointing quarter in terms of manufacturing activity (possibly becoming the weakest quarter in four years). And this is certainly not a good omen for Indonesia’s economic growth in Q4-2019.
Manufacturing activity in Indonesia has been in the red zone throughout the third quarter of 2019. In fact, the performance in Q3-2019 was Indonesia’s weakest performance in terms of manufacturing activity since the last quarter of 2016.
After the ‘false start’ in the third quarter of 2019 when, in July, Indonesia’s manufacturing conditions contracted for the first time since January 2019, there is again some bad news to share. In August 2019 manufacturing conditions in Southeast Asia’s largest economy continued to contract, and even at a more rapid pace than last month.
Latest Columns Manufacturing
Although manufacturing activity in Indonesia rose slightly in July 2018, there are a number of reasons to be concerned. The headline seasonally adjusted Nikkei Indonesia Manufacturing Purchasing Managers' Index (PMI) indeed grew modestly from a reading of 50.3 in June to 50.5 in July (a reading of 50.0 separates contraction from expansion in the nation's manufacturing activity). However, overall conditions remain lacklustre in Southeast Asia's largest economy.
The Indonesia Nikkei Manufacturing Purchasing Managers Index (PMI) showed a slight improvement to a reading of 51.7 in May 2018, up from 51.6 in the preceding month, meaning that activity in Indonesia's manufacturing sector expanded last month (a reading above 50.0 indicates expansion, while one below 50.0 indicates contraction). The PMI index measures the activity level of purchasing managers in the manufacturing sector. This survey is closely watched as purchasing managers usually have early access to data about their company's performance, which can be a leading indicator of overall economic performance.
Indonesia's manufacturing activity improved in April 2018, touching its fastest growth pace in 22 months, on the back of strengthening domestic demand. The Nikkei Indonesia Manufacturing Purchasing Managers' Index (PMI) rose to a reading of 51.6 in April 2018, up from 50.7 in the preceding month (a reading above 50.0 indicates expansion in manufacturing activity, while a reading below 50.0 indicates contraction). However, business confidence towards the business outlook (for the year ahead) weakened to the lowest point since December 2012.
Indonesia's Nikkei Manufacturing Purchasing Managers' Index (PMI) eased to 50.7 in March 2018 from a reading of 51.4 in the preceding month (when manufacturing activity touched a 20-month high in Southeast Asia's largest economy). Softer expansion in output and new orders were cited as reason for slowing growth. A reading above 50.0 indicates expansion in manufacturing activity, while a reading below 50.0 indicates contraction.
Indonesia's manufacturing activity improved markedly in February 2018 with the Nikkei Indonesia Manufacturing Purchasing Managers' Index (PMI) rising to a reading of 51.4, from 49.9 in January (the 50.0 level separates contraction from expansion). It was the fastest pace of growth for Indonesia's manufacturing sector since June 2016; growth that came on the back of rising output and new orders.
One method to ignite structurally high economic growth for a sustained period of time in Indonesia is to encourage the development of the country's stagnant manufacturing sector. A thriving manufacturing industry (especially when it can export domestically manufactured products) will accelerate economic growth and generate plenty of employment opportunities (which will then encourage rising household consumption).
Manufacturing activity in Indonesia continued to contract in January 2018 (for the second month in a row) albeit at a slower pace. The Nikkei Indonesia Manufacturing Purchasing Managers' Index (PMI) rose from 49.3 in December 2017 to a reading of 49.9 in January (a reading below 50.0 indicates contraction, while a reading above 50.0 indicates expansion in manufacturing activity).
The manufacturing industry of Indonesia remains in a troublesome state. The latest Nikkei Indonesia manufacturing purchasing managers' Index (PMI) reading declined to 49.3 in December 2017, from 50.4 in the preceding month (a reading below 50.0 indicates contraction, while above 50.0 indicates growth in the country's manufacturing activity). It was the first time since July 2017 that Indonesia's manufacturing activity contracted.
Indonesia is being threatened by deindustrialization. There have been reports that rising minimum wages, the low quality of local human resources, or scarcity of local raw materials have been encouraging companies in certain industries to relocate to other countries in Asia. This partly explains why the manufacturing industry's role toward Indonesia's gross domestic product (GDP) has been on the decline.
Indonesia's Nikkei manufacturing purchasing managers' index (PMI) grew to a reading of 50.4 in November 2017, slightly improving from 50.1 in the preceding month when broad stagnation was detected. A reading above 50.0 indicates expansion in the manufacturing sector, while a reading below 50.0 indicates contraction. Indonesia's November manufacturing growth was primarily caused by accelerating expansion in output and new orders.
