Jakarta. Indonesia's manufacturing industry cooled down in October as total new orders grew only slightly and employment decreased at the fastest pace since March, a Nikkei Indonesia Manufacturing Purchasing Managers' Index survey revealed.

The index – a composite of manufacturing output, new orders, exports and employment measures to give a snapshot of manufacturing business conditions – fell to 50.1 in October from 50.4 in September. Readings above 50 indicate an overall increase in manufacturing output.

"Indonesia's manufacturing sector started the fourth quarter on a delicate foundation," IHS Markit economist Aashna Dodhia said in a statement on Thursday (02/11).

The October survey of manufacturers showed that cost pressures continued and firms were unable to pass the burden on to customers due to competitive conditions.

Dodhia said despite that, manufacturers "enjoyed some breathing space as input-cost inflation eased to the slowest since December 2016."

The annual inflation rate stood at 3.07 percent in October, down from 3.7 percent a month earlier.

New businesses increased for the third consecutive month in October but it was only marginal. Dodhia noted that the slight growth in new business hinted at stronger demand for Indonesian goods in external markets.

New export orders rose at the fastest pace since November 2012. The manufacturers' overall output, however, stabilized following a decline in September.

Work backlogs declined for the 41st consecutive month in October. The report said a lack of capacity pressure led to the fastest job shedding since March.

Despite the stagnation, optimism over the 12-month outlook for output improved from September's 57-month low, on the back of promotional activities and demand improvements.