Indonesia's Manufacturing Output Increases at Record Rate in November

    Wahyu Dwi Anggoro - 01 December 2020 13:26 WIB
    Indonesia's Manufacturing Output Increases at Record Rate in November
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    Jakarta: The IHS Markit Indonesia Manufacturing Purchasing Managers’ Index™ (PMI™) rose nearly three points from 47.8 in October to 50.6 in November, indicating an improvement in the health of the sector for the first time since August. 

    At 49.2, the average PMI reading for the fourth quarter so far is the strongest since the third quarter of 2019.

    Following the loosening of large-scale social restrictions (PSBB) in Jakarta in mid-October, firms ramped up production in November, with output increasing at the fastest rate since the survey began over nine-and-a-half years ago. 

    Anecdotal evidence indicated that the reopening of production lines and increased sales had lifted output volumes.

    Demand conditions also improved, with inflows of new business increasing for the first time since August. 

    However, the rate of expansion was marginal.

    "The subdued upturn in sales, and a further marked drop in backlogs of work, suggest that the strong output expansion was connected to manufacturers working through previously-placed orders. Firms remained reluctant to invest in new capacity and inventories, with factory employment and purchasing activity both contracting at solid rates," said IHS Markit Principal Economist Bernard Aw in a press release on Tuesday.

    "The sustainability of the upturn will rely on a more robust recovery in demand," he added.

    Moreover, business sentiment remained positive. 

    The majority of firms continued to expect output to rise over the coming year, citing expectations of a return to normal market conditions alongside planned promotional activities and improvements to product quality.


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