Manufacturing Activity Indonesia Rebounds in July 2020 Albeit Remaining in the Red Zone
While Indonesia’s manufacturing activity has remained contracting in July 2020 as a result of the COVID-19 crisis that seriously disrupts consumption, production and trade flows, the positive news is that the rate of contraction eased significantly.
The IHS Markit Indonesia Manufacturing Purchasing Managers’ Index (PMI) grew from a reading of 39.1 points in June 2020 to 46.9 points in July 2020. This is the highest reading since February 2020. However, considering the reading remained below the 50.0 threshold that separates expansion from contraction, Indonesia’s manufacturing activity continued to contract, implying a further deterioration in the health of the manufacturing sector. As such, local manufacturers remain reluctant to invest in additional production capacity, while employment declined further and purchasing activity fell. Also inventories continued to shrink.
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