Indonesia: Manufacturing PMI signals continued weakness in sector in December
January 1, 2016
The manufacturing Purchasing Managers’ Index (PMI) inched up from 46.9 in November to 47.9 in December, according to a release provided by Nikkei. The index has been below the 50-threshold, which indicates contraction in the manufacturing sector, since October of 2014.
December’s weak result was driven by ongoing declines in both output and new orders amid weak domestic and global demand. Production losses remained sharp and new orders continued on the losing trend that started in October 2014. Lower production and new work requirements led manufacturers to reduce their input purchasing activity at a record pace and cut staffing levels for the 16th straight month.
According to Nikkei, “factories in Indonesia ended 2015 on a weak note, with declines in output, new orders and employment being recorded for a further month. Falling commodity prices continue to be offset by a weaker rupiah and higher prices paid for imported raw materials pushed up overall cost burdens. With global economic growth remaining sluggish, external demand for Indonesian manufactured goods dropped again in December.”
Author: Carl Kelly, Economist