Indonesia’s Manufacturing Sector Sees Solid Expansion in July

Indonesia’s Manufacturing Sector Sees Solid Expansion in July


Improved demand and accelerating output growth led to a solid expansion in Indonesia’s manufacturing sector in July, the latest S&P Global Indonesia Manufacturing Purchasing Manager’s Index™ (PMI) showed on 1 August. 

The headline seasonally adjusted PMI rose to 53.3 in July from 52.5 in June, signalling an improvement in the health of the sector for the twenty-third consecutive month. The improvement in July was the fastest recorded since last September, S&P Global said.

Accelerated growth in new orders and efficiency gains contributed to a steeper increase in production at the start of the third quarter, according to the survey of purchasing managers in a panel of around 400 manufacturers in the biggest economy in the ASEAN region.

Production expanded at the fastest clip in ten months in July, driven by rising new orders. Better demand conditions led to the volume of new work to rise at a historically elevated rate overall. Foreign demand improved as well, as new export orders returned to marginal growth, the S&P Global survey found.

Supplier capacity also increased and supported a renewed improvement in vendor performance in July, though the rate at which lead times shortened was only slight.

Sentiment across Indonesia’s manufacturing sector remained positive in July, indicating that firms were optimistic about production in the coming 12 months.

“An acceleration in total new order growth was driven not only by firmer domestic demand, but also a renewed increase in new business from abroad, to suggest a broad-based improvement in demand conditions,” said Jingyi Pan, Economics Associate Director at S&P Global Market Intelligence.