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Manufacturing PMI returns to growth but cost pressure persists
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Quality assurance: PT Indah Kiat Pulp and Paper employees inspect paper sheets in a finishing room inside the company's factory in Tangerang, Banten, on Aug. 25, 2016. (JP/Donny Fernando)
O
ptimism is rising among Indonesian manufacturers, as reflected in growth of output and new orders leading up to the turn of the year.
Despite the positive momentum, challenges persist, with increasing costs of imported materials due to a weakening rupiah forcing businesses to raise product prices.
The latest manufacturing purchasing managers’ index (PMI) report for Indonesia, published by S&P Global on Thursday, rose to a reading of 51.2 in December from 49.6 in November.
The figure rose back above the 50-point threshold that separates expansion from contraction after five consecutive months below it.
The monthly PMI report is based on a survey of purchasing executives from around 400 manufacturing companies across the country to gauge business conditions in the sector.
According to the S&P Global report, market demand strengthened both domestically and internationally, with the volume of new export orders rising for the first time in nearly a year.
In response, manufacturers ramped up their purchasing activity in November and December to meet higher production and new order requirements.
