JAKARTA (TheInsiderStories) – Indonesia’s Nikkei Manufacturing Purchasing Managers’ Index or PMI, fell to its lowest in three months in October, said IHS Markit in their latest report released today (01/11). The PMI fell from 50.7 in September to 50.5 in October.

The weakening momentum came as both input and output price inflation accelerated to three-year highs, driven by a weak Rupiah, said the report. Bernard Aw, economist at IHS Markit rated, Indonesia’s manufacturing sector lost further momentum at the start of the fourth quarter, reflecting signs of softer demand conditions.

“The relatively weak exchange rate means manufacturers may continue to face greater cost pressure in the months ahead due to greater prices for imported items,” he added.

Furthermore Aw said, increase in output and employment pushes
PMI headlines in October, while the company continues to increase purchasing activities and building input inventories. However, the survey also shows signs decrease in client demand with a decrease
seen in new requests and sales export.

At the same time, inflationary pressures intensified which was driven by weakening Rupiah exchange rate. However, the company generally survives positively against estimates longer term business.

The PMI of the Nikkei shows small improvements in the health condition of the sector that is. The data is below the average
seen during the first nine months of the year this.

PMI headlines provide an overview of manufacturing performance in a country that originates from questions about output, new requests, employment, inventory, and delivery time. The latest survey data shows a decline demand at the beginning of the fourth quarter.

Demand new ones that entered in general dropped for first time since January, which is partly due to a sharp decline in export sales. However, weakening conditions demand has no major impact on production volume in October. On the contrary the output continues to expand at the moderate level the beginning of the last quarter of this year.

Companies add labor to adjust to the increase in requirements
production. However, the rate of increase in the field new work is only in the low range. Level unresolved work has not changed
in October, thus ending the period 52 months decrease in job buildup.

Responding to rising output, the company Indonesia increased their purchasing activities for nine consecutive months during the month October. This then contributes towards the construction of input stock.

Resurrection inputs add to the supply chain burden. Performance
Vendors dropped again at the beginning of the fourth quarter.
It was reported that transportation problems and problems with shipping documents as factor behind the delay in delivery time.

Meanwhile, finished goods inventory decreases with anecdotal evidence showing that time Faster delivery is a factor
main stock decline. As a result of weakening exchange rates and increases raw material prices, Indonesian manufacturers facing greater cost pressure.

Especially, input price inflation is getting faster during more than three years. This causes companies increase their output costs on
the fastest range since October 2015.

Finally, the sentiment towards the business forecast for the year
upcoming positive hold. Period Output Index The front rose to the highest position in five months in October. Reason for optimism it includes more sales estimates high, new products, planned capacity expansion, marketing and promotional activities.

Email: linda.silaen@theinsiderstories.com