The S&P Global Indonesia Manufacturing PMI fell to 49.3 in July 2024, down from 50.7 in June. This marks the first contraction in factory activity since Aug-21, signaling a challenging period for the manufacturing sector. Manufacturing output decreased for the first time in over two years, indicating weakening production capabilities. New orders also declined after a year-long expansion, reflecting reduced demand for manufactured goods. Additionally, foreign sales experienced a drop, partly due to delays in shipping, which impacted export performance. A slight decrease in purchasing activity was recorded, marking the first drop in nearly three years as manufacturers adjusted to the lower demand. Employment shrank at the highest rate since Sept-21, indicating reduced labor demand and potential job losses within the sector. Backlogs of work decreased for the second consecutive month, suggesting a decline in pending orders. Lead times lengthened for the first time in three months, highlighting potential supply chain disruptions and logistical challenges. On the cost side, input price inflation softened but remained elevated, indicating persistent cost pressures. Output charges, meanwhile, rose at the steepest pace in three months, suggesting that manufacturers passed on some of the increased costs to customers. We expect industrial demand to weaken over the coming year due to poor market conditions, including low purchasing power and constrained global demand. With limited growth prospects both domestically and internationally, we anticipate Indonesia's PMI to hover around 50-51 until the end of the third quarter, aligning with our economic growth projection of 4.9% for this year. The post Indonesia Manufacturing PMI appeared first on Samuel Sekuritas Indonesia.