JAKARTA (TheInsiderStories) - The latest Purchasing Managers Index (PMI) survey data indicates a new slump on Indonesian manufacturing conditions during the month re-implementation of the COVID-19. After solid increases in August, output and new orders both declined at a solid rate at the end third quarter.
As a result the company increased its efforts to reducing capacity and additional costs as they decrease purchasing activity. Inventories are also running low, while the pressure is on inflation adjusts.
IHS Markit reported, Indonesia Manufacturing PMI fell nearly four points from 50.8 in August to 47.2 in September, marking the index’ first decline since April, at the time the global pandemic peaked. With a record below the threshold neutral 50.0, the current figure indicates a decline in health sector and illustrates the slump in the gains achieved by PMI in the last months.
Re-imposition of large-scale social restrictions in Jakarta in mid-September, when viral infections increased adversely affects sales and manufacturing production. After experiencing a solid increase in August, the inflows of new orders fell sharply in September, though at a slower pace than its violent contraction occurred between March and June when the global pandemic peaked.
Output also decreased again. The respondents highlighted that re-tightened restrictive measures disrupt activity factory.
Commenting on the results, Bernard Aw, Chief Economist from IHS Markit, said: “In the midst of increasing cases of viral infection, restrictions large-scale social affairs was re-implemented in Jakarta, associated with a decline in manufacturing recovery Indonesia.”
He continued, “The latest PMI data indicates a slump new to factory condition in September, with sales and production declined solidly at the end the third quarter after a marked increase in months August. The company reduces capacity and additional costs as part of efforts to control costs and stay still. Employment decreased temporarily purchasing activity continues to contract. Inventory too thinning out.”
He adds, the latest PMI figures suggest that the manufacturing sector Indonesia faces many operating conditions challenging in the next few months. Is recovery the strong will take root to a large extent depend on the country’s ability to control the pandemic. “Hope on the outlook for next year remains positive, but optimistic depending on the development of the COVID-19 situation,” said Aw.
The decline in sales contributed to the increase in income further capacity, as reflected in the decline another on the backlog of work. This hinders recruitment. Employment decreased for the seventh consecutive month the rate of job dismissal is rapid as layoffs have been reported online broad among many companies.
The company also reduces purchasing and inventory activities as part of efforts to control spending. Input purchases are declining solidly, albeit at a slower pace in the current seven month decline period. Inventory input running low for nine consecutive months when the stock of goods is finished experiencing contractions for three consecutive months.
In terms of prices, inflationary pressure improved at the end of the third quarter. The weak Rupiah reportedly pushed up cost inflation, though Total input costs increased at the lowest rate since March. Output costs increase by a marginal range as is anecdotal evidence indicates a number of companies giving price discounts to stimulate sales.
Restrictions on COVID-19 are re-enforcing as well limit the ability of suppliers to deliver supplies on a regular basis on time. The average delivery time was extended for four consecutive months during September. In the end, expectations regarding next year’s output are very high high, but optimism generally rests on that hope the pandemic will be brought under control.
Edited by Editorial Staff, Email: theinsiderstories@gmail.com
