PMI Manufacturing No Longer Expansive, Sri Mulyani's Subordinates Argue That ASEAN Countries Are Also Falling

JAKARTA - The government through the Ministry of Finance (Kemenkeu) reports that the policy for the implementation of Level 4 Community Activity Restrictions (PPKM) in several regions has resulted in a decrease in economic activity and the level of public demand.

This then had an impact on the Indonesian Purchasing Managers Index or PMI Manufacturing in the July 2021 period, which decreased to the level of 40.1.

Head of Public Communications of the Fiscal Policy Agency of the Ministry of Finance, Endang Larasati, said that the same trend was also experienced by other ASEAN countries.

"The decline in the Manufacturing PMI to a level below 50 indicates a contraction in manufacturing sector activity," he said in an official statement as quoted on Tuesday, August 3.

To note, some time ago the government had released that in the last nine months before July 2021, Indonesia's Manufacturing PMI was in the expansive category or above level 50.

This figure then decreased from 3.5 in June 2021 and was the deepest level of decline since June 2020 with a record of 39.1, although it is still far from the Manufacturing PMI when the PSBB was enforced with 27.5 in April 2020.

"Several other countries in ASEAN that recorded a decline in Manufacturing PMI included Malaysia, Vietnam, Thailand, and Myanmar," he said.

According to Endang, the increase in COVID-19 cases due to the spread of the delta variant was responded quickly by the government by pressing the brakes on tightening restrictions which had implications for decreasing community activities during July 2021.

The activity of the national manufacturing sector as reflected in the PMI Manufacturing indicator also decreased.

More specifically, the decline in the Manufacturing PMI was caused by a decline in output and new demand due to production and demand constraints. New export demand declined for the first time since the last four months.

"This shows that demand at the global level is also declining due to the escalation of COVID-19 and the spread of the Delta variant in several countries. The company responded by reducing activities and workforce in line with PPKM Level 4," he explained.

Endang added that this mobility restriction policy is temporary and continues to be evaluated periodically according to the development of pandemic control parameters.

"The government continues to invite the public to improve compliance with health protocols, because cooperation in controlling the pandemic between the government and the community is the key to boosting economic recovery performance, including the recovery of the manufacturing sector going forward," he concluded.