uploads///Indonesias Manufacturing PMI in February

Why Indonesia’s Manufacturing PMI Rose Strongly in February

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Mar. 21 2018, Updated 10:15 a.m. ET

Indonesia’s manufacturing PMI

According to a report by Markit Economics, Indonesia’s (IDX) (ASEA) manufacturing activity rose solidly in February 2018. It stood at 51.4 in February as compared to 49.9 in January 2018. In January, manufacturing activity was in the contraction zone. A level below 50 indicates contraction. It was the strongest expansion in manufacturing activity since June 2016.

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

  • Production volume and output grew at a faster rate in February 2018 and hit a 20-month high.
  • New orders expanded at the fastest rate since November 2017. However, export orders showed a marginal contraction.
  • Employment in the manufacturing sector also rose in the same month.

The stronger improvement in domestic demand mainly helped manufacturing activity in Indonesia. The global economy and major emerging economies are showing some nervousness, as the Fed is expected to continue its gradual rate hike process in the upcoming years.

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Market impact

The VanEck Vectors Indonesia ETF (IDX), which tracks the performance of Indonesia, fell 4.3% in February 2018. However, the Global X FTSE Southeast Asia ETF (ASEA), which tracks the performance of Southeast Asia, rose a marginal 0.1% during the same month.

In the next part of this series, we’ll analyze the indicators that investors should watch this week.

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