Hope Short-Lived; Indonesia’s Manufacturing Activity Falls Back into Contraction in September
In August 2020 we were positively surprised as Indonesia’s manufacturing activity managed to expand (after experiencing five straight months of contraction) despite the country still being in the middle of the unprecedented COVID-19 crisis.
However, in September 2020, the country’s manufacturing activity fell back into the red zone. The IHS Markit Indonesia Manufacturing Purchasing Managers’ Index (or PMI) declined nearly four points from a reading of 50.8 in August 2020 to 47.2 points in September 2020; well below the 50.0 threshold that separates contraction from expansion in manufacturing activity.
The latest data strengthen our suspicion that there was no structural improvement in the conditions of Indonesia’s manufacturing sector in August 2020. Quite likely the positive August data originated primarily from the release of pent-up demand caused by the social and business restrictions in the April-July 2020 period.
Hence, our concern is that in the next couple of months Indonesia will be back stuck with lackluster manufacturing activity because both at home and abroad demand is low.
Read the full article in our September 2020 report. You can order the report by sending an email to info@indonesia-investments.com or message to +62(0)8.788.410.6944 (incl. WhatsApp).
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