Indonesia factory orders accelerate as hiring stays modest
Indonesia’s October manufacturing indicator climbed to its highest level since March 2024. New export orders grew at their fastest pace since the survey began in 2011, alongside increases in production and purchasing. Employment rose only marginally. Samuel Sekuritas attributed some activity to government-related projects and warned that higher expenses and accumulating inventories could constrain the recovery.
Economics & Markets··Midday
October factory activity reaches its strongest level since March 2024
Indonesia’s manufacturing Purchasing Managers’ Index (PMI) climbed to 54.0 in October from 52.4 in September. The reading beat the 51.9 market expectation cited by J Trust Bank Indonesia, an Indonesian bank. Securities firm Samuel Sekuritas Indonesia identified it as the strongest level since March 2024. The October release showed that manufacturing remained in expansion and that business activity had gained momentum from the preceding month.[1], [2]
New orders expanded at the fastest pace since October 2021. Export orders increased at their strongest rate since the survey started in 2011. Production and input purchasing also grew. Samuel Sekuritas attributed some of the stronger activity to government-related projects, while treating the durability of demand from domestic and overseas customers as an important uncertainty in its assessment.[1]
Stock accumulation accompanies only modest hiring
Inventories increased alongside the rise in purchasing and production. Samuel Sekuritas warned that further accumulation could burden manufacturers if demand moderated. Its assessment called for evidence that stronger orders could be sustained before judging the recovery’s strength. That caution concerned the persistence of the improvement after October’s rise in activity.[1]
Manufacturers added workers only marginally despite producing more. Samuel Sekuritas therefore described the recovery’s transmission into job creation and household purchasing power as limited. It remained cautious about the broader economic benefits of the manufacturing improvement and did not describe October’s stronger reading as an established structural shift towards investment-led growth.[1]
Higher expenses feed into selling prices
Raw-material and fuel expenses, together with exchange-rate pressure, accelerated input-price increases. Manufacturers raised their selling prices in response. Samuel Sekuritas warned that those pressures could constrain margins and that passing additional increases to customers could weaken demand. Improving delivery times offered some relief, but the firm considered this only a partial offset to the other pressures.[1]
The firm retained annual economic-growth forecasts of 5.32 per cent for the third quarter and 5.2 per cent for the fourth quarter. Its full-year estimate remained 5.35 per cent. These were Samuel Sekuritas’s forecasts accompanying the October manufacturing assessment, with exchange-rate volatility, energy expenses and modest hiring among the concerns it cited.[1]
