uploads///Indonesias Manufacturing Activity Upbeat

Why Indonesia’s Manufacturing PMI Hit a 10-Month High in April

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Nov. 20 2020, Updated 12:47 p.m. ET

Manufacturing activity in Indonesia on an uptrend

In April 2017, manufacturing activity in Indonesia (IDXG) saw its strongest rise since mid-2016, mainly due to the faster expansion of new work orders. The Nikkei Indonesia Manufacturing PMI (purchasing managers’ index) grew for the second-straight month, touching a 10-month high in April.

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Nikkei Manufacturing PMI in Indonesia in April

The Nikkei Indonesia Manufacturing PMI (IDX) rose to 51.2 in April, up from 50.5 in March—its highest reading since June 2016. This rise was backed by an increase in output, new orders, and new export orders amid rising business sentiment.

Output expanded in April as well, with new export orders going up for the first time in seven months. Simultaneously, order books also rose for the second-straight month in April.

Meanwhile, the relatively weaker Indonesia rupiah against the US dollar (UUP) (USDU) exerted upward pressure on input prices. The cost of inflation reached an 18-month high along with a rise in output prices. The manufacturing PMI in Indonesia has averaged 50 from 2012 to 2017.

Indonesian economy

The Indonesian economy (IDX) is steadily growing, supported by strong domestic consumption and efforts by its government to instigate pro-market reforms to make the country more business friendly.

Meanwhile, the World Bank has forecast higher growth for Indonesia (IDX), at about 5.1% and 5.3% for 2017 and 2018, respectively. The solid growth expectation for 2017 is due to a likely rise in private investments.

Investment impact

The Jakarta Composite Index (JKSE) gained about 16% in 2016, but the recent slump in oil prices has affected the performance of Indonesian oil and gas producers including the Medco Energi Internasional (MEYYY), Sugih Energy, and Energi Mega Persada (PEGIY).

Investors can access Indonesian markets through ETFs like the iShares MSCI Indonesia ETF (EIDO) and the VanEck Vectors Indonesia Index ETF (IDX), which gained about 9% and 6.0%, respectively, in 1Q17 amid improved growth expectations.

Continue to the next part for a look at manufacturing activity in Greece.

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