The manufacturing industry in Indonesia is still able grow positive in the first quarter (1Q) of 2020 amid the pressure from the pandemic, said the minister on Tuesday (04/21) - Photo: Privacy

JAKARTA (TheInsiderStories) – Purchasing Managers Index (PMI) of Indonesia manufacturing was recorded in 48.2 in November 2019, increased from October 2019 of 47.7. However, IHS Markit showed the Indonesia manufacturing condition has not been better but turned to be worse.

On their latest release on Monday (12/02), the worse manufacturing condition was caused by decreasing in new outputs and orders. Moreover, the sales were noted lower, so affected by the buildup of finished goods.

“The buildup of finished goods impacted to decreasing of products making, therefore, the company must cut the workforces and product costs,” IHS Markit wrote.

IHS Markit noted Indonesia’s manufacturing PMI result in November also signed the deterioration of the sector in the five months in a row. The November index was also the second-lowest since the end of 2015.

“The average of PMI index in the fourth quarter also showed Indonesia is in the way to record the lowest index in the last four years,” IHS Markit noted.

IHS Markit saw in overall, the demand for Indonesia’s manufacture is getting slow in the mid of the four-quarter though. The new orders also seem to weaken.

“Overall, the demand in the mid of the four-quarter is getting slowly, the new order’s income also noted declining in the four months in a row,” IHS Markit said.

Going forward, IHS Markit is still optimistic, Indonesia’s manufacturing will be better. It is supported by the market expansion and the increasing in the promotion which upgrades the product quality.

Japan and China’s PMI

Meanwhile, the Japanese manufacturing sector remained stuck in a downturn midway through the fourth quarter as falling order book volumes. Weakness was particularly apparent in overseas markets, with export demand deteriorating at the fastest pace in five months.

The Jibun Bank Japan Manufacturing PMI was remained below 50 or 48.9 in November 2018, not change significantly from October 2019 of 48.4, to signal a continuation of the downturn in Japan’s manufacturing sector.

The stuck was caused by the firms took action and discounted their output prices, taking advantage of slower input cost inflation. The only real positive from the survey came on the jobs front, with manufacturing employment rising at an accelerated pace.

Economic decline was apparent in the investment and intermediate goods sub-categories, while consumer goods makers observed a marginal improvement from October.

The latest survey data pointed to lower output volumes across the Japanese manufacturing sector. Although the decrease was softer than in October, it was broadly equal to the average seen across the current 11-month contraction period. Weak demand was the key factor driving production cutbacks, according to panel member comments.

In contrast to Japan, PMI data signaled a further modest improvement in the health of China’s manufacturing sector during November. New business rose strongly, which underpinned a further solid increase in production.

China’s PMI edged up from 51.7 in October to 51.8 in November, to signal an improvement in overall operating conditions for the fourth successive month. Though modest, the pace of improvement was the strongest since December 2016.

“The latest upturn in the health of the sector was partly supported by a further rise in new business placed with Chinese manufacturers,” IHS Markit noted.

Notably, new export orders saw the first back-to-back monthly rise for over a year-and-a-half. Staffing levels were broadly stable following a seven-month sequence of decline, but capacity pressures persisted with backlogs of work expanding again.

Average input costs meanwhile rose marginally, while factory gate charges fell slightly amid reports of a general drop in market prices. Despite further increases in output and new orders, the level of positive sentiment towards the 12-month outlook for production slipped to a five-month low in November. Stricter environmental policies and market uncertainty were key factors weighing on confidence.

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