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Today's Headlines Manufacturing Industry
Indonesia's manufacturing activity continued to expand in September 2017, albeit at a slower pace compared to the preceding month. Based on the new Nikkei survey, released on Monday (02/10), Indonesia's manufacturing purchasing managers' index (PMI) was recorded at 50.4 points, down from 50.7 in August (a reading of 50.0 separates contraction from expansion in the country's manufacturing activity).
Rising output and stronger export orders caused a modest recovery in Indonesia's manufacturing sector in August 2017. Indonesia's Nikkei-Markit manufacturing purchasing managers' index (PMI) rose to a reading of 50.7 in August, from 48.6 in July (50.0 separates expansion from contraction in the manufacturing industry).
Manufacturing activity in Indonesia fell further in July 2017, touching a one-year low. The Nikkei Indonesia Manufacturing Purchasing Managers' Index (PMI) was recorded at 48.6 in July, falling deeper into contraction. In the preceding month the index was 49.5 (a reading of 50.0 separates contraction from expansion). Declining new orders caused a sharp and rapid drop in output in Indonesia's manufacturing sector. This then led to job losses, fewer quantities of inputs purchased and depletion in stock levels.
Growth of manufacturing activity in Indonesia eased in May 2017. The Nikkei Indonesia Manufacturing Purchasing Managers' Index (PMI) dropped to 50.6 in May from a reading of 51.2 in the preceding month. Last month manufacturing activity in Indonesia had hit a 10-month high, hence the lower reading indicates a loss of growth momentum for Indonesia's manufacturing sector. However, it remained comfortably above the boom-or-bust line of 50.0 that separates expansion from contraction.
Good news for Indonesian manufacturers. The Nikkei Indonesia Manufacturing Purchasing Managers' Index (PMI) recorded a second consecutive month of growth, touching a 10-month high of 51.2 in April 2017 (from a reading of 50.5 in the preceding month), as further expansion in order books encouraged local companies to boost production, while the relatively weaker rupiah rate (versus the US dollar) exerted upward pressure on input prices, with cost inflation reaching an 18-month peak. Subsequently, output prices rose at an accelerated pace.
Amid falling output and declining new orders as well as sharply rising input costs, Indonesia's manufacturing activity contracted again in February 2017. The Nikkei Indonesia Manufacturing Purchasing Managers' Index (PMI) fell to a reading of 49.3 in February, sliding from 50.4 in the preceding month (a reading below 50.0 indicates contraction, while a reading above 50.0 points at expansion of the manufacturing sector). Meanwhile, buying levels remained unchanged.
Indonesia's manufacturing sector is targeted to provide employment to a total of 16.3 million workers in 2017, up 5 percent from 15.5 million workers in the preceding year. As such, development of the manufacturing industry is a good strategy to reduce Indonesia's unemployment rate. Industries within the manufacturing sector of Indonesia that absorb the highest number of workers are the textile, footwear, food & beverage, and automotive industries.
Indonesia's manufacturing activity improved in the first month of 2017. The Nikkei Indonesia Manufacturing Purchasing Managers' Index (PMI) grew to a reading of 50.4 in January 2017, from a reading of 49.0 in the preceding month supported by a slight increase in order books (a reading above 50 signals expansion of the nation's manufacturing industry, while a reading below 50 indicates contraction). The latest data end a three-month contraction streak in Indonesia's manufacturing sector.
The Industry Ministry of Indonesia targets to see the contribution of the manufacturing industry toward the nation's gross domestic product (GDP) rise further above 20 percent in 2017. This growth is supported by the start of operations of several new smelters. I Gusti Putu Suryawirawan, Director General of Metal, Machinery, Transportation Equipment & Electronic Industries at the Indonesian Industry Ministry, said ten new smelters will start the production phase this year.
Manufacturing activity in Indonesia continued to contract in the last month of 2016. The Nikkei Indonesia Manufacturing Purchasing Managers' Index (PMI) slid to a reading of 49.0 in December 2016, from 49.7 in the preceding month (a reading below 50.0 signals contraction, while a reading above 50.0 signals expansion). It was the third consecutive month of contraction in the manufacturing sector of Southeast Asia's largest economy. The survey also showed that Indonesia's manufacturing exports showed their steepest fall since October 2015.
Latest Columns Manufacturing Industry
Chinese ferronickel producer Virtue Dragon Nickel Industry plans to invest USD $5 billion for the establishment of a nickel smelter, power plant and a port. Andrew Zhu, President Director at Virtue Dragon Nickel Industry said that these facilities will be built on a 500-hectares estate in Konawe (Southeast Sulawesi). Zhu said that the nickel smelter development involves three phases. In the first phase, which should be finished by the end of 2015, the smelter will have an annual ferronickel production capacity of 600,000 tons.
Although the Indonesian rupiah exchange rate appreciated 0.86 percent to IDR 11,995 per US dollar on Friday (27/06) as economic data from China, South Korea and Taiwan sparked optimism that regional growth has picked up, the recent depreciating trend of Indonesia’s currency burdens the country’s manufacturing industry. This industry is still dependent on imports of raw materials, capital goods and auxiliary materials, which are paid using US dollars causing the domestic industry to feel the financial impact of a weaker rupiah.
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