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View all search resultsRI manufacturers see tough times ahead as higher US tariffs kick in
Indonesian manufacturers are increasingly cautious in their outlook as business confidence has fallen to a record low amid concerns over United States import tariffs. The waning sentiment risks holding back investment.
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Roll 'em out: Workers assemble electric motorbikes at the Alva Manufacturing Facility in Cikarang, West Java, in this undated handout photograph. (Alva Auto/-)
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ndonesian manufacturers are increasingly cautious in their outlook as business confidence has fallen to a record low amid concerns over United States import tariffs. Experts warn that waning sentiment risks holding back investment.
The latest manufacturing Purchasing Managers’ Index (PMI) report from S&P Global shows that producers’ expectations for business conditions in the coming year slumped sharply in July as confidence hit the lowest level since the series began in April 2012.
Business confidence is an essential indicator to predict future behavior in the crucial sector, including decisions on investment, production expansion and employment policies, according to Permata Bank chief economist Josua Pardede.
“In the short to medium term, weak business confidence could result in slower new investments in the manufacturing sector, which could adversely impact production and job creation,” he told The Jakarta Post on Friday.
While current manufacturing activity improved as the headline PMI index rose to 49.2 in July from a reading of 46.9 in June, firms raised concerns that the US tariffs and reduced purchasing power on the part of clients would limit production volumes in the year ahead.
Also, with a value below the 50-point threshold that separates expansion from contraction, the index remained in negative territory for a fourth consecutive month amid sustained weak output and demand.
"July's survey data indicated another negative month for the health of the Indonesian manufacturing economy. Downturns in output and new orders were sustained at the start of the third quarter, but eased from June.” Usamah Bhatti, economist at S&P Global Market Intelligence, explained on Friday.
