Industry Confidence Index Falls for Three Consecutive Months, Remains in Expansionary Phase

The Ministry of Industry (Kemenperin) has released the latest Industry Confidence Index (IKI) score. The IKI is used to gauge the confidence level or optimism of the manufacturing industry regarding economic conditions.

The scale used is 0-100. The higher the score, the higher the confidence and optimism.

The IKI score in May 2023 was 50.90 points. This is down 0.48 points compared to April 2023, which reached 51.38 points.

April 2023's achievement also saw a decrease compared to March 2023, which was 51.87 points. February 2023 was 52.32 points, and January 2023 was 51.54 points.

February 2023 recorded the highest score over the past five months.

The slowdown in the IKI in May 2023 was influenced by the decline in the IKI of several industrial sub-sectors, which shifted from expansion to contraction.

The sub-sectors that experienced correction are the tobacco processing industry; the paper and paper products industry; the printing and recording media reproduction industry; the pharmaceutical, chemical, and traditional medicine industry; and the base metal industry.

"As a result, the share of the expansion sub-sector in the non-oil and gas processing industry's GDP in the first quarter of 2023 decreased to 70.6%. This share comes from 12 sub-sectors," said the Spokesperson for the Ministry of Industry (Kemenperin), Febri Hendri Antoni Arif, when releasing the May 2023 IKI in Jakarta on Wednesday (31/5/2023).

The IKI is compiled from several components, including new orders, product inventory, and production. Production and product inventory variables experienced expansion in May 2023, while the new orders variable experienced contraction.

The IKI provides an overview of the processing industry's condition and the business outlook for the next six months in Indonesia. The IKI is also used to diagnose problems in the industrial sector and provide quick and accurate solutions.

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 Industry Confidence Index (IKI).

The assessment is as follows:

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