JAKARTA (TheInsiderStories) – Manufacturing activity in Indonesia in December improved for the first time in four months, indicating a modest improvement in the health of the sector.
Based on IHS Markit survey showed on Wednesday (01/02), the Nikkei Indonesia Manufacturing Purchasing Managers’ Index (PMI), rose to 51.2 from November’s 50.4. A reading above 50 indicates an expansion while a reading below 50 points to a contraction.
New orders rose for the first time during December, primarily driven by the domestic market. Export orders continued to fall despite a more competitive exchange rate.
“The recent stabilization of the rupiah against the dollar also helped to tame inflationary pressures,” added Bernard Aw, economist at IHS Markit, which compiles the survey.
He continued, “Strong inflationary pressures remained a key concern as firms grappled with rising input costs amid softer demand. PMI surveys showed input costs rising solidly at the end of the year, but at a noticeably slower rate compared to recent months.”
Last November, Indonesia’ PMI fell to its lowest in three months. The PMI fell from 50.5 in October to 50.4 in November. the weakening momentum came as both input and output price inflation accelerated to three-year highs, driven by a weak Rupiah, said the report.
At the same time, inflationary pressures intensified which was driven by weakening Rupiah exchange rate. However, the company generally survives positively against estimates longer term business.
Finally, the sentiment towards the business forecast for the year
upcoming positive hold. Reason for optimism it includes more sales estimates high, new products, planned capacity expansion, marketing and promotional activities.
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