The IHS Markit Indonesia Manufacturing PMI dropped to 49.6 in July 2019 from 50.6 in the previous month. This was the first contraction in factory activity since January, as output fell for the first time in six months and employment shrank for the first time since May last year. In addition, buying levels declined the most in three years, with firms tapping into existing stocks to meet production requirement and input inventories falling for the first time in six months, albeit only marginally.

At the same time, demand conditions remained subdued, as indicated by a slight rise in new orders, though export sales grew at the fastest rate since October 2017. Consequently, the survey pointed to signs of spare capacity, with backlogs of work declining for the first time in three months. On the price front, input cost inflation was modest, while selling prices were broadly unchanged. Finally, sentiment remained buoyant, though the level of optimism dipped to a three-month low.