After a Surge, the Industrial Confidence Index Dips Again in July 2023

The Industrial Confidence Index (IKI), released by the Ministry of Industry (Kemenperin), reached 53.31 points in July 2023. This figure is actually a decrease from the June 2023 achievement of 53.93 points.

June's achievement was the highest since January 2023. The IKI score even slumped for three consecutive months, namely March-May 2023, as shown in the graph.

Nevertheless, Kemenperin confirmed that the July 2023 score is still in the expansion phase.

"The Industrial Confidence Index in July 2023 reached 53.31. This means it remains in expansion, although it slowed by 0.62 points compared to June 2023," said Kemenperin Spokesperson, Febri Hendri Antoni Arif, during a press conference in Jakarta on Monday (31/7/2023), as reported on the official website.

Febri explained that the score decrease in July 2023 was due to the decline in the IKI of several sub-sectors of the industry that initially experienced expansion, now experiencing contraction.

The sub-sectors that shifted to contraction are the ready-made clothing industry, base metals, wood and cork products, non-metallic mineral products, and the repair and installation of machinery/equipment sub-sector. Meanwhile, two constant sub-sectors experienced contraction: the textile and other processing industries.

Febri explained that, in general, industrial confidence in July 2023 was still very good because several large sub-sectors, such as the food, motor vehicle, beverage, and electrical equipment industries, experienced increased expansion.

The IKI performance in July 2023 is considered by Febri to be only slower than June but better than other months since the first IKI release in November 2022.

"This is supported by the improving Indonesian economic conditions," said Febri.

The IKI is used to measure the degree of confidence or optimism of the manufacturing industry towards economic conditions. The scale used is 0-100. The higher the score, the higher the confidence and optimism.

This index is compiled from several components, including new orders, product inventory, and production. The IKI is also used to diagnose problems in the industrial sector and solve them quickly and accurately.

The IKI assessment is included in the Minister of Industry's Circular Letter Number 13 of 2022 concerning the Reporting of Industrial Activities in the Context of Compiling the Industrial Confidence Index (IKI).

The assessment parameters are as follows:

* 0 < IKI < 50: contraction
* IKI = 50: stable
* 50 < IKI < 100: expansion or optimistic

(Also read: Industrial Confidence Index Down for Three Consecutive Months, Remains in Expansion Phase)