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Risks threaten Indonesian manufacturing despite moderate improvement: Analysts
Manufacturers in Indonesia remained confident that output will increase over the coming year, although sentiment dipped slightly in December, according to an IHS Markit survey.
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Thousands of workers make personal protective equipment from waterproof materials at the PT Kasih Karunia Sejati factory in Malang, East Java, on April 20, 2020. (JP/ Aman Rochman)
T
he Indonesian manufacturing sector is expected to see a moderate improvement this year, according to analysts, following an expansionary trend seen at the end of 2020, though uncertainty continues to loom over the industry.
Indonesia’s Manufacturing Purchasing Managers’ Index (PMI), a compilation of responses from a monthly survey of 400 manufacturers, rose to 51.3 in December from 50.6 in November, data from business information provider IHS Markit shows. A reading above 50 reflects an expansion from the previous month.
The reading signaled a modest improvement in business conditions and the greatest jump in 10 months, supported by a sharper increase in new orders and improving demand as disruption from the COVID-19 pandemic eased, according to IHS Markit.
“Indonesian firms had a largely positive end to 2020, with latest PMI data showing second successive rises in output and new orders,” IHS Markit economics director Andrew Harker said in a statement on Jan. 4.
Read also: Uncontrolled pandemic haunts Indonesia’s manufacturing expansion
“There remains a long way to go given the severe disruption caused by the COVID-19 pandemic, but manufacturers are at least confident regarding prospects for 2021.”
The coronavirus outbreak has hit manufacturing activity hard due to the implementation of strict movement restrictions to curb the virus spread and disruptions in supply chain and production activity.
