Manufacturing Activity of Indonesia Continues to Contract in August 2021; Hints at Weak Q3
Between November 2020 and June 2021 we saw Indonesia’s manufacturing sector recovering from the ultra-lows that were recorded in the second and third quarters of 2020.
Last month, however, there occurred a sudden and quite big hiccup with the country’s manufacturing output and new orders contracting at the fastest pace since May 2020. This fall was undoubtedly related to the tighter social and business restrictions (PPKM Level 1-4) that were imposed at the start of July 2021.
Unfortunately, recovery was modest in August 2021 with the IHS Markit Indonesia Manufacturing Purchasing Managers’ Index (PMI) increasing from a reading of 40.1 points in July 2021 to 43.7 points in August 2021 (a PMI reading above 50.0 indicates expansion, while a reading below 50.0 indicates contraction).
In line with the headline PMI reading, both output and new orders continued to fall in Indonesia in August 2021, but at slower rates compared to the preceding month. This, too, is in line with the trend of new confirmed COVID-19 cases in the country: there was still a significant number of new cases (albeit small compared to the whole population size) but throughout August 2021 this trend continued to ease sharply, hence allowing the Indonesian government to ease PPKM measures. Nonetheless, panelists in the survey continued to state that the COVID-19 related restrictions had weighed on both demand and production. Likewise, foreign demand for Indonesian manufactured goods fell at a slower rate in August 2021.
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The full article is available in the August 2021 edition of our monthly report. This report can be ordered by sending an email to info@indonesia-investments.com or a message to +62.882.9875.1125 (including WhatsApp).
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