JAKARTA (TheInsiderStories) – Following a marginal deterioration in December, Indonesia’s manufacturing economy broadly stabilized in January. While output was relatively stable at the start of 2018, new orders and employment fell only slightly. At the same time, input prices continued to rise sharply, but firms were restricted in their ability to fully pass on higher cost burdens to clients amid relatively subdued demand conditions.

The headline seasonally adjusted Nikkei Indonesia Manufacturing Purchasing Managers’ IndexTM (PMITM) rose from December’s five-month low of 49.3 to 49.9 in January. This was consistent with a broad stabilization of operating conditions across Indonesia’s goods producing sector.

The upward movement in the headline index reflected broadly stable output, after a slight drop in December. Meanwhile total new orders declined for the second month in a row, albeit only slightly, amid reports of relatively lacklustre demand.

“Weak overseas demand continued to be a key factor driving the reduction in total new business. Furthermore, new export sales dropped at the fastest since March 2017. Overall, appreciation of the Indonesian rupiah relative to the US dollar may put further pressure on rejuvenating foreign demand for Indonesian goods,” Aashna Dodhia, Economist at IHS Markit, which compiles the survey, said.

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