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Manufacturing expansion tempered by decreased exports, higher prices
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Quality control: A worker at a steel factory in the Cikarang industrial estate in Bekasi, West Java, inspects the quality of products on Oct. 4, 2019. (Antara/Fakhri Hermansyah)
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fter a two-month slowdown, the country’s manufacturing sector performed strongly in July, despite being hit by supply-side inflation and waning export demand.
According to IHS Markit data, Indonesia’s Purchasing Managers’ Index (PMI) reached 51.3 in July, up 1.1 points from the previous month. PMI scores above 50 indicate expansion in the manufacturing sector, while those below 50 signal contraction.
The industry's shift of fortune was attributed to robust output and new orders as domestic demand spurred growth in an economy that expanded 5.01 percent year-on-year (yoy) in the first quarter.
Although the current PMI is below the ASEAN-wide headline figure of 52.2, it places Indonesia third in the region, below Singapore and Thailand at 60.0 and 52.4, respectively.
Read also: RI ranks third in ASEAN on manufacturing PMI
The index was based on a poll of buying managers in the manufacturing industry, who were asked whether business circumstances had improved, stayed the same or gotten worse from the previous month in terms of a range of indicators, such as demand from clients, supply deliveries, employment levels and business confidence.
"The Indonesian manufacturing sector regained growth momentum in July, with output and new orders both rising at faster rates," S&P Global economist Siân Jones said in the report on Monday.
