In the first quarter of 2016 Indonesia's manufacturing activity declined 1.34 percent from the fourth quarter of 2015 according to data from Statistics Indonesia (BPS). This decline is primarily caused by weaker growth of the processed tobacco industry (-9.99 percent q/q), rubber & plastic industry (-7.66 percent q/q), paper & paper products industry (-5.73 percent q/q), the motor vehicles, trailers and semi-trailers industry (-4.54 percent q/q), and electrical equipment (-4.13 percent q/q). BPS Head Suryamin said the decline of the tobacco industry was caused by a weak harvest, not because of a rise in the tobacco tax rate.
Suryamin further informed that there were also several industries that managed to post expansion, such as the wood, wood products and cork industry, basic metals, transportation equipment, the pharmaceutical industry, and apparel. However, the performance of these industries was not enough to offset the weaker growth posted by the above-mentioned industries.
Overall, Indonesia's manufacturing industry grew 3.41 percent in the first quarter of 2016, down from a 4.75 percent growth pace in Q4-2015. It is, however, a normal phenomenon to see manufacturing output decline in the first quarter compared to the last quarter of the preceding year because in the last quarter of the year industries tend to raise output ahead of Christmas and New Year celebrations. In the first quarter of 2015 Indonesia's manufacturing industry rose 5.06 percent.
Indonesia Manufacturing PMI: