Indonesia’s manufacturing activity has shown signs of improvement for the first time since February, but risks remain as new COVID-19 clusters emerge in factories and industrial areas and as household spending remains weak.

IHS Markit’s Manufacturing Purchasing Managers’ Index (PMI) for Indonesia, a gauge of the country’s manufacturing activity, rose to 50.8 points in August from 46.9 a month before. A value above 50 indicates an expansion against the previous month, while a reading below 50 reflects a contraction.

“Indonesian manufacturers reported an improvement in business conditions for the first time since February, with output growing at the fastest rate for just over six years,” IHS Markit head economist Bernard Aw said in a statement on Tuesday.

The index had recorded its worst decline in the survey’s nine-year history and the steepest drop recorded in Asia when it fell to 27.7 in April from 45.3 in March as the COVID-19 containment measures forced factories to shut and caused unemployment to grow.

Aw said the higher PMI was driven by solid growth in both production volumes and new order inflows in August, as well as revived demand from the gradual reopening of the economy.

However, the rise in production has yet to lift factories’ capacity utilization to a level higher than before the pandemic struck, as manufacturers used stocks of goods to meet increased demand, resulting in further layoffs, albeit at an easing rate than in July.

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