Indonesia's Manufacturing Sector Expands at Quicker Pace in December 2023

The headline seasonally adjusted S&P Global Indonesia Manufacturing Purchasing Manager’s Index (PMI) rose to 52.2 in December, up from 51.7 in November.

IDXChannel - The headline seasonally adjusted S&P Global Indonesia Manufacturing Purchasing Manager’s Index (PMI) rose to 52.2 in December, up from 51.7 in November, to signal that  manufacturing sector conditions continued to improve  and at the fastest rate since September. 

This extended the current period of manufacturing sector expansion to 28 months. 

Higher new work intakes, including from overseas,  supported faster production growth and a renewed  qccumulation of backlogged work. 

Headcounts also rose  qlongside purchasing activity, aided by improved optimism  among goods producers regarding the year-ahead outlook.  Selling prices meanwhile rose at a slightly quicker rate  despite softer input cost inflation. 

"December's PMI data indicated that Indonesia's manufacturing sector concluded the final quarter of the year on a positive note as incoming new orders  and output both expanded at solid rates. This helped  to bolster purchasing activity and led to a sustained increase in employment across the goods producing  sector, supporting further improvements in economic activity," Jingyi Pan, Economics Associate Director at S&P Global Market Intelligence, said in a media release, Tuesday (2/1/2024).

Overall sentiment in the Indonesian manufacturing sector improved again in the latest survey period as firms grew more hopeful that sales will continue to expand in 2024. 

Although  remaining below the series average, the level of optimism  was the second-highest recorded since October 2022.

"Forward-looking PMI indicators, including the backlogs  of work and future output indices, also trended positively.  Overall business confidence notably rose to the secondhighest level in over a year, while a slight accumulation  of backlogged work reflected improvements in demand  conditions," Pan explained.

"Finally, despite the rate of selling price inflation rising in  December, it remained well below the series average to  indicate muted price pressures," Pan concluded. (WHY)