Manufacturing industry performance in the fourth quarter of 2020 represented continuous improvement despite being in a contractionary phase, as reflected by the increase in the Prompt Manufacturing Index of Bank Indonesia (PMI-BI) to 47.29%, from 44.91% in the previous quarter and 28.55% in the second quarter of 20201. Improvement were reported in almost all PMI-BI components, primarily production volume as supported by speed of supplier delivery time and workers. By sector, most sub-sectors recorded performance improvement in the fourth quarter of 2020, mainly for Iron and Basic Steel, Fertilizer, Chemical, and Rubber Products, followed by Paper and Printing sub-sector, which are currently in an expansion phase. Manufacturing Performance Business Optimism In the first quarter of 2021, survey respondents predicted an increasing in Manufacturing Industry and will be in an expansionary phase, with PMI-BI regaining 51.14%, from 47.29% in the previous quarter. PMI-BI increase will be driven by components of order volume, inventories and production volume which are in the expansion phase. Within the period, several sub-sectors are estimated to be in the expansion phase, dominated by Food, Beverage, and Tobacco, Cement and Non-Metallic Mineral, Fertilizer, Chemical, and Rubber Products, and Paper and Printed Products. Prompt Manufacturing Index – Bank Indonesia The latest PMI-BI reading indicated a shallower manufacturing industry contraction in the fourth quarter of 2020. 1 The latest Prompt Manufacturing Index-Bank Indonesia (PMI-BI) indicated a shallower manufacturing industry contraction in the fourth quarter of 2020, with the index improving to 47.29% from 44.91% in the previous period. Furthermore, respondents predicted further gains in the first quarter of 2021, moving into expansionary territory with a reading of 51.14% compared with 47.29% in the fourth quarter of 2020 (Graph 1). An index above 50 points signals business expansion and below 50 points signals business contraction. Prompt Manufacturing Index (PMI) – Bank Indonesia The higher PMI-BI is congruent with the latest manufacturing industry developments reported in the Bank Indonesia Business Survey.based on The higher PMI-BI is congruent with the latest manufacturing industry developments in the fourth quarter of 2020, as reported in the Bank Indonesia Business Survey, with the corresponding weighted net balance (WNB) improving to -0.47% from -1.45% in the previous period. In addition, respondents predicted further improvements in the first quarter of 2021, as reflected by another bump in the WNB to 0.80% (Graph 2). the Business Survey (SKDU). Most components contributed to the higher PMI-BI recorded in the fourth quarter of 2020, led Most components contributed to the higher PMI-BI in the fourth quarter of 2020.. by production volume which improved to 49.94% despite remaining in a contractionary phase. Moreover, the PMI-BI was also boosted by a seasonal surge of public activity during the Christmas and New Year festive period that stoked demand and supported by the availability of production facilities. A. Production Volume In the fourth quarter of 2020, the Production Volume Index remained at a contractionary level of 49.94%, despite improving from 45.35% in the third quarter of 2020 on the back of growing seasonal demand during the Christmas and New Year festive period. The Production Volume Index increased in line with faster supplier delivery times as an indicator of supporting materials for production. Furthermore, respondents predicted production volume to move into an expansionary phase in the first quarter of 2021 with a reading of 51.32% (Graph 3). Prompt Manufacturing Index (PMI) – Bank Indonesia Production 50% *expectation B. Order Volume In the fourth quarter of 2020, the Order Volume Index retreated below the 50-point threshold that separates expansion from contraction in the manufacturing sector at 49.33% compared with 50.55% in the previous period, held back by most subsectors, Wood Products and Other Wood Products in particular. Respondents explained that order volume had increased in the previous period in preparation for strong seasonal demand during the Christmas and New Year festive period. In the first quarter of 2021, respondents predicted an expansionary Order Volume Index at 55.52% (Graph 4), affecting various subsectors such as Food, Beverages and Tobacco, Fertilisers, Chemicals and Rubber Products, as well as Paper and Printing. Order 50% *expectation C. Inventory Consistent with higher production volume, respondents also confirmed an improvement in the Inventory Index from 43.87% in the third quarter of 2020 to 46.78% in the fourth quarter of 2020, which is still in a contractionary phase. Nevertheless, respondents expected the Inventory Index to move into expansionary territory in the first quarter of 2021, with a reading of 52.55%, in line with increasing production volume (Graph 5). Prompt Manufacturing Index (PMI) – Bank Indonesia 50% *expectation D. Labour In line with higher production volume, the Labour Index improved to 44.95% in the fourth quarter of 2020 from 41.03% in the previous period yet remained in a contractionary phase. Notwithstanding, respondents predicted further gains in the first quarter of 2021, with a contractionary index of 48.35% (Graph 6). 50% *expectation E. Supplier Delivery Time Index Supported by smooth distribution and supply, the Supplier Delivery Time Index recorded a modest improvement in the fourth quarter of 2020 with a reading of 42.27% (Graph 7), while respondents predicted further gains in the first quarter of 2020 to a level of 44.89%. Prompt Manufacturing Index (PMI) – Bank Indonesia 50% *expectation Most manufacturing subsectors achieved fourth-quarter gains in 2020. Respondents expected most manufacturing subsectors to move into an expansionary phase in the first quarter of 2021. Most manufacturing subsectors achieved fourth-quarter gains in 2020, with several industries moving into expansionary territory, led by Fertilisers, Chemicals and Rubber Products (51.44%), followed by Paper and Printing (50.50%). Respondents expected most manufacturing subsectors to move into an expansionary phase in the first quarter of 2021, including Food, Beverages and Tobacco (54.26%) on maintained demand along with adequate raw materials for production, Fertilisers, Chemicals and Rubber Products (54.21%) as well as Paper and Printing (51.20%) (Graph 8). (%, Indeks) 75.00 65.00 57.43 54.21 54.26 52.47 50.44 55.00 48.83 48.00 45.00 49.71 45.19 49.01 43.82 42.59 40.49 43.45 39.43 35.00 51.20 50.50 50.36 49.92 51.48 46.37 44.48 42.03 52.50 49.17 51.44 50.53 48.99 47.14 48.49 45.88 40.26 38.39 36.89 42.39 41.32 41.28 45.50 48.18 42.41 25.00 15.00 I II IIIIV I II IIIIV I II IIIIVI* 2018 2019 I II IIIIV I II IIIIV I II IIIIVI* 2020 2021 2018 Makanan, Minuman & Tembakau 2019 I II IIIIV I II IIIIV I II IIIIVI* 2020 2021 2018 Tekstil, Brg Kulit & Alas Kaki Prompt Manufacturing Index (PMI) – Bank Indonesia 2019 I II IIIIV I II IIIIV I II IIIIVI* 2020 2021 2018 Barang Kayu & Hasil Hutan lainnya 2019 I II IIIIV I II IIIIV I II IIIIVI* 2020 2021 2018 Kertas dan Barang Cetakan 2019 I II IIIIV I II IIIIV I II IIIIVI* 2020 2021 2018 Pupuk, Kimia & Barang dari Karet 2019 I II IIIIV I II IIIIV I II IIIIVI* 2020 2021 2018 Semen & Barang Galian Non Logam 2019 I II IIIIV I II IIIIV I II IIIIVI* 2020 2021 2018 Logam Dasar Besi & Baja 2019 20202021 Alat Angkut, Mesin & Peralatannya APPENDIX Prompt Manufacturing Index (PMI) – Bank Indonesia Food, beverages and tobacco 44.45 52.57 48.34 48.61 48.95 62.13 55.22 62.74 52.19 54.95 52.35 52.47 50.44 35.30 48.00 48.83 54.26 Textile, leather products and footwear 48.56 51.27 49.28 49.24 53.24 55.46 51.94 60.22 49.42 50.95 50.53 49.71 45.19 19.10 39.43 43.45 49.92 Wood products & other wood products 47.26 51.91 48.58 48.58 53.03 55.53 52.08 53.18 47.61 45.97 48.51 50.36 42.59 19.75 40.49 38.39 43.82 Paper & printing 48.98 51.38 54.13 48.79 48.55 55.89 60.54 53.50 54.06 52.75 54.34 49.01 42.03 24.11 46.37 50.50 51.20 Fertilizers, chemicals and rubber products 52.02 48.89 54.89 50.69 50.89 55.40 53.18 51.75 49.88 53.34 55.84 51.48 44.48 34.71 45.88 51.44 54.21 Cement and non metalic mineral products 46.14 54.24 48.87 48.98 47.03 50.44 52.68 56.77 50.53 47.49 53.19 57.43 40.26 25.76 48.49 49.17 52.50 Iron and basic steel 52.66 55.30 57.74 51.13 55.38 54.41 54.25 54.43 43.94 48.70 50.05 50.53 36.89 27.81 41.32 48.99 42.39 Transport equipment, machinery & apparatus 47.59 51.02 49.90 44.42 41.61 52.32 52.31 63.20 51.40 52.57 53.01 47.14 41.28 24.63 45.50 42.41 48.18 Prompt Manufacturing Index (PMI) – Bank Indonesia METHODOLOGY PMI – BI is a composite indicator providing an overview of manufacturing sector performance in Indonesia. PMI-BI is comprised of five other indices, namely new order volume (input), production volume (output), employment, supplier delivery times and inventories. PMI is calculated based on a pre-assessment of benchmarked Purchasing Manufacturing Prompt Manufacturing (PMI)countries. – Bank Indonesia Indices from a numberIndex of other An index reading of above 50 signals business expansion, while a reading of below 50 indicates a contraction. PMI-BI second quarter is calculated from 698 respondents in the manufacturing sector.
