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View all search resultsIndonesian manufacturing slows down as demand fizzles further
Contraction comes from entrenched domestic orders, scaled back hiring of local firms.
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Activities in an automotive assembly plant for Suzuki-brand cars in Bekasi, West Java, in this file photo. BMI Research puts Indonesia in its to-watch list as the market of 250 million population is still widely untouched, hence giving rooms for rapid growth in several sectors that include manufacturing. (Kompas/Totok Wijayanto)
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ndonesian manufacturers remain pessimistic about growth prospects as softening domestic demand continued to drag on output, purchasing and employment in June, which experts have cited as signs of the declining health of the goods-producing sector.
The country’s manufacturing Purchasing Managers’ Index (PMI) slipped to 46.9 in June from 47.4 in May, marking its second-lowest reading since August 2021, behind April, of this year.
It was also the third consecutive month the index has remained below the 50-point threshold that separates expansion from contraction.
The decline reflected a sharper drop in new orders and production, with the fall in sales driven primarily by domestic customers. Export orders, meanwhile, remained broadly unchanged after two straight months of contraction.
“The reduction in sales was largely domestic-driven, as export sales stabilized on the month,” said Usamah Bhatti, economist at S&P Global Market Intelligence, in the release published on Tuesday.
“The malaise in total new orders prompted firms to enter retrenchment mode as they sought to reduce employment levels and purchasing activity.”
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