Indonesia's Manufacturing PMI Rises to 43.7 in August 2021

Indonesia's Manufacturing Purchasing Managers' Index (PMI) stood at 43.7 points in August 2021. This figure reflects that Indonesia's manufacturing activity remained contracted. However, the Indonesian manufacturing PMI score increased by 8.98% compared to the previous month, which was 40.1.

IHS Markit explained that both production and new manufacturing orders in Indonesia continued to decline, although relatively less than in July 2021. This condition occurred due to the continued increase in daily Covid-19 cases, although it appeared better than at the end of July 2021.

The implementation of Community Activity Restrictions (PPKM) to reduce corona cases also led to a high backlog of work. This is because the number of employees working in the office was more limited.

In addition, there were shipping delays, such as a nineteen-month consecutive extension of order fulfillment time. Due to these delays, several manufacturing companies experienced difficulties in product delivery. This also caused a marginal increase in inventory.

Furthermore, the increase in raw material costs resulted in high inflation since January 2014. Moreover, manufacturing companies chose to share the cost burden with their clients.

Nevertheless, the business confidence level regarding production in the next 12 months remained above the survey average. This indicates the companies' expectation that the corona pandemic will improve and facilitate the fulfillment of delayed demand in the manufacturing sector.