The manufacturing industry saw growth in March, as indicated by an increase in the purchasing managers index (PMI) to 51.2, from 50.1 in the previous month, higher than the average PMI in ASEAN counties, which stood at 50.3.
“The latest figure shows that investor confidence in the manufacturing sector is improving. They also believe that the business climate in Indonesia is stable,” said Industry Minister Airlangga Hartarto in a statement on Monday, referring to the monthly index issued by Nikkei.
The Indonesia’s PMI in March was also better than the indexes in Thailand (50.3), Singapore (47.9) and Malaysia (47.2).
A PMI level above 50 indicates expansion in the manufacturing industry. The index is calculated based on questions on production, new demand, employment, inventory and the duration of goods distribution.
The PMI survey is a compilation of monthly responses to questionnaires sent to 300 manufacturing companies involved in basic metals, chemical and plastics, electricity and optics, food and beverage, machinery, textile and textile products, woods and papers as well as transportation.
Indonesia’s manufacturing PMI was recorded at 49.9 in January, 50.1 in February and 51.2 in March. “The increase in PMI indicates that our manufacturing sector is growing. We encourage the manufacturers to be more productive and competitive,” Airlangga added.
Nikkei recorded optimistic sentiment among the respondents. Meanwhile, 43 percent of panelists project output increase during the next 12 months on the back of a sales increase projections, planned business expansion, capacity investment, increased effort in marketing divisions and promotional activities.
Bernard Aw, an economist with HIS Markit, who was responsible for arranging the survey, said Indonesia’s manufacturing industry saw positive growth in the first quarter of 2019.
“Output grew for the first time in the last three months in line with the increase of total new demand. It is good sign for the sector in entering the second quarter,” Bernard said in the same statement.
Airlangga said Indonesia had seen 5.4 percent growth in the manufacturing sector this year.