Why Indonesia’s Manufacturing PMI Weakened in October

According to a report by Markit Economics, Indonesia’s (IDX) (ASEA) manufacturing activity stood at 50.1 in October as compared to 50.4 in September. It was the weakest expansion in manufacturing activity since August 2017. A level above 50 indicates expansion in manufacturing activity, and a level below 50 indicates contraction in activity.

Indonesia’s manufacturing PMI in October was mainly due to the following factors:

• Production volume and output improved marginally in October 2017 compared to September 2017.
• New orders rose the least in that month. Export orders rose the most since November 2012.
• Employment in the manufacturing sector fell the most since March 2017.

The business confidence index of Indonesia has improved marginally in October 2017. Input cost inflation also improved during the month. The improving economic situation in Indonesia is strengthening investors’ confidence in the economy. Various reforms are also supporting investor sentiment.

The VanEck Vectors Indonesia ETF (IDX), which tracks the performance of Indonesia, rose 0.88% in October 2017. The Global X FTSE Southeast Asia ETF (ASEA), which tracks the performance of Southeast Asia, rose 1.4% in October 2017.

In the next part of this series, we’ll look at the performance of Mexico’s manufacturing PMI in October 2017.