IHS Markit reported the Manufacturing Purchasing Managers' Index (PMI) of Indonesia mount to 52.2 in January 2021 or higher than the previous month at 51.3 - Photo by Industry Ministry Office

JAKARTA (TheInsiderStories) – IHS Markit reported the Manufacturing Purchasing Managers’ Index (PMI) of Indonesia mount to 52.2 in January 2021 or higher than the previous month at 51.3. The increase surpassed Vietnam (51.3), Thailand (49.0), Malaysia (48.9), and the ASEAN manufacturing PMI (51.4).

In Asian level, China’ Manufacturing PMI decreased to 51.3 compared to the previous month’ 51.9 while Japan slipped 50.0 to 49.8. Although rise, the Indonesia’ PMI, said Andrew Harker, the director of economics at the agency, the manufacturing sector is still on a recovery path in early 2021, with output growth and new orders among the best in surveys for this decade.

“This trend provides a further boost of confidence, the highest in four years at the start of the year,” he said in an official statement released on Monday (01/02) by adding the recovery in the Indonesian manufacturing sector continued in January as both output and new orders expanded at accelerated rates and business confidence hit a four-year high.

The extent of the disruption caused by the COVID-19 pandemic meant that spare capacity remained evident, however, and firms lowered employment again. Issues in supply chains became more pronounced, with shortages of materials contributing to the steepest increase in input costs since October 2018.

Moreover, the latest improvement in the health sector was the most marked for six-and-a-half years, and one of the greatest since the survey began in April 2011. A solid and accelerated expansion in new orders was recorded during January, with the third successive rise in total new business the strongest since July 2014.

The report said, the increase in new orders reflected a further recovery in customer demand. That said, new export orders declined again as the COVID-19 pandemic continued to impact export trade. The fall in new business from abroad was the fourteenth in as many months. The improvement in total new orders supported a further increase in manufacturing production at the start of 2021.

Moreover, the rate of growth was the second-fastest in the survey’ history, just behind November 2020′ record. Business confidence also strengthened in January, with optimism fueled by hopes of an end to the pandemic and further new order growth. In fact, sentiment reached a four-year high as around three-quarters of respondents predicted a rise in output over the coming year.

“One negative aspect of the survey remains employment, however, which stubbornly continued to fall in January. This highlights that while progress on the road to recovery has been made, there is still some way to go before the lost activity from last year can be made up,” he noted.

Commenting on the result, minister of industry, Agus Gumiwang Kartasasmita, emphasized that the government is continue to create a conducive business climate while accelerating the implementation of various national economic recovery programs from the impact of the pandemic.

Based on the ministry data, in 2020, the processing industry was able to record an export values of US$131.13 billion, rose 2.95 percent from a year ago. The industrial sector contributed around 80.30 percent of the total national export values which reached $163.30 billion in 2020. This positive trend made the manufacturing sector trade balance throughout 2020 a surplus of $14.17 billion.

He also reported that the realization of investment in the industrial sector grew 26 percent, from Rp216 trillion to Rp272.9 trillion ($19.49 billion) in 2020.

US$1: Rp14,000

Written by Editorial Staff, Email: theinsiderstories@gmail.com