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View all search resultsManufacturing back in expansion zone, but export woes linger
The purchasing managers’ index (PMI) climbed back above 50 last month as output edged higher and business confidence hit a six-month high, but weak exports and high input costs are keeping manufacturers wary.
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Workers assemble furniture on July 7 at a company in the Wijayakusuma Industrial Estate (KIW) in Semarang, Central Java. (Antara/Makna Zaezar)
D
omestic manufacturing activity returned to expansion territory in July after four months of contractions as factory output edged up and domestic demand steadied, but weak exports and elevated raw material costs are keeping the recovery fragile.
The country’s manufacturing purchasing managers’ index (PMI) rose to 50.2 in July from a reading of 46.9 in June, putting it back above the 50-point threshold that separates expansion from contraction, according to a monthly survey by S&P Global released on Monday.
S&P Global Market Intelligence economist Usamah Bhatti wrote in the report that the headline PMI marked a “renewed upturn in output volumes,” as firms recorded fresh growth in both output and new orders, though higher input prices continued to restrain a broader recovery.
“The rate of input cost inflation remained well above the historical average, but positively eased to the softest in four months, suggesting that inflationary pressures may have peaked,” Bhatti continued.
Read also: RI factories slide into contraction in June amid soaring costs, weak demand
Factory output expanded for the first time since February as production picked up and new orders stabilized after falling sharply a month earlier.
