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Manufacturing activity inches up despite steep drop in orders
According to the latest S&P Global report, Indonesia’s manufacturing purchasing managers’ index (PMI) remained in contraction territory at 47.4 in May, albeit slightly improved from 46.7 in the previous month.
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A worker installs the battery of a Hyundai IONIQ 5 electric car at the Hyundai Motor Manufacturing Indonesia (HMMI) assembly plant in Cikarang, West Java, on April 6, 2023. (JP/Rachmat Kurniawan)
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luggish domestic demand and weaker exports, partly due to import tariffs imposed by the United States on goods from most countries, have led to a sharp decline in new orders for Indonesian manufacturers.
Despite the slowdown, firms remain optimistic that the downturn is temporary and have even increased hiring in anticipation of a rebound.
The latest manufacturing purchasing managers' index (PMI) report published by S&P Global on Monday showed a slight rise in the index to 47.4 points in May from a reading of 46.7 in April.
This marks the second consecutive month the index has remained below the 50-point threshold that separates expansion from contraction.
Based on a survey of purchasing managers from around 400 manufacturers nationwide, the PMI report offers a snapshot of business conditions in the sector.
According to the report, new orders fell for the second consecutive month, with the decline accelerating in May to its steepest level since August 2021.
This drop was driven by weaker market demand and fewer requests for goods, while international demand also took a hit, with manufacturers signaling notable falls in exports to the US.
