BI’s Prompt Manufacturing Index (PMI-BI) was recorded at 28.55 percent, its deepest ever contraction, compared with 45.64 percent in the first quarter this year. An index reading above 50 indicates expansion while below 50 reflects contraction.

The central bank survey showed that all component indexes, including overall output and new orders, declined for the second consecutive quarter. The production volume index was the lowest at 25.36 percent, followed by the order volume index at 28.95 percent and goods stock volume at 32.28 percent.

“The contraction was due to lower demand and supply chain disruption amid the COVID-19 pandemic,” the central bank said in a statement. “We expect the performance of the manufacturing sector to pick up in the third quarter despite still being in the contraction phase.”

All manufacturing sectors tumbled in the second quarter, with deepest contraction recorded in textile and leather goods, as well as wood and forest products, according to the PMI-BI survey. The central bank expects all sectors of manufacturing to pick up in the third quarter from its lowest level in the April-June period.

Manufacturers are now hoping activities will pick up following the reopening of the economy after three months of large-scale social restrictions (PSBB), which forced factories to halt production and retail stores to close to curb the spread of COVID-19.

However, the coronavirus outbreak remains a threat to manufacturers with employees at several factories testing positive for COVID-19, including of publicly listed consumer goods giant PT Unilever Indonesia and automaker PT Toyota Motor Manufacturing, prompting temporary closures of the plants.

Popular

Batam residents protest data centers amid water crisis

Recentralization concerns in fiscal, education heighten

Popular discontent is justified. Authoritarianism is not the answer