By registering below the neutral 50.0 threshold, the latest figure indicated a deterioration in the
health of the sector and represented a setback to the gains made by the PMI in recent months.
The re-imposition of large-scale social restrictions (PSBB) in Jakarta in mid-September amid rising virus infections had adversely impacted manufacturing sales and production.
"Latest PMI survey data indicated a renewed deterioration in factory conditions in September, with sales and production falling solidly at the end of the third quarter after marked increases in August," said IHS Markit Principal Economist Bernard Aw in a press release on Thursday.
Having risen solidly in August, inflows of new orders fell markedly in September, albeit at a rate that was slower than the severe contractions seen between March and June, at the height of the pandemic. Output also fell back into decline. Respondents highlighted that the re-tightening of containment measures had disrupted factory activity.
The reduction in sales contributed to a further development of spare capacity, as reflected by another decline in backlogs of work. This dampened hiring. Companies also scaled back their purchasing activity and inventories as part of efforts to control costs.
"The latest PMI numbers suggest that the Indonesian manufacturing sector faces challenging operating conditions in the months ahead," he stated.
Meanwhile, expectations regarding output over the coming year remained elevated, but optimism was mostly pinned on hopes that the covid-19 pandemic will be brought under control.