Domestic Orders Contribute to Rise in Indonesia's Manufacturing PMI in June 2023

S&P Global data shows that Indonesia's Manufacturing Purchasing Managers' Index (PMI) reached 52.5 points in June 2023. This is an increase from the 50.3 points achieved in May 2023.

The Ministry of Industry (Kemenperin) states that this increase signifies that Indonesia's manufacturing sector has been expansive for 22 consecutive months. The rise in the PMI in June was due to an increase in new orders, particularly in the domestic market.

"Increases also occurred in production and employment," wrote Kemenperin in its report received by Databoks on Tuesday (1/8/2023).

Looking at the first half of 2023, June's score was the second highest after April 2023, which reached 52.8 points. The lowest was May 2023, which was close to contraction, at 50.3 points.

Separately, the Spokesperson for Kemenperin mentioned that out of more than 40 countries surveyed by S&P Global, approximately 61.9% experienced contraction, indicated by a PMI below 50 points.

"Meanwhile, Indonesia has been in an expansionary phase for 22 consecutive months, or almost two years, with a manufacturing PMI value above 50," said Febri, as quoted from the official Kemenperin website on Wednesday (26/7/2023).

This indicator is also in line with the Industrial Confidence Index (IKI) released by Kemenperin.

In June 2023, the IKI reached 53.93, an increase of 3.03 points compared to May 2023. This value was driven by an increase in the IKI score in 21 industrial sub-sectors.

"The majority of industrial players stated that overall business conditions have improved and have a positive outlook on business conditions in the next six months," said Febri.

This PMI figure indicates optimism among business sector players regarding future economic conditions. Investors and analysts often use this manufacturing PMI as a reference.

The parameters for assessing PMI are as follows:

* 0 < PMI < 50: contraction or slowdown
* PMI = 50: stable
* 50 < PMI < 100: expansion or growth

(Also read: After Soaring, Industrial Confidence Index Falls Again in July 2023)