Jakarta: Indonesia's manufacturing sector expansion slowed in June amid a renewed rise in covid-19 cases, according to IHS Markit.
The IHS Markit Indonesia Manufacturing Purchasing Managers’ Index™ (PMI™) posted 53.5 in June, down from May's record high of 55.3 to a three-month low.
Nonetheless, the report said, business conditions have now strengthened in each of the past eight months, with the latest upturn strong overall.
Rates of output and new order growth eased from the highs seen in May, leading to a slight moderation in optimism among firms, the report stated.
Hiring conditions were broadly stable, but supply disruption and higher raw material costs contributed to stronger increases in input costs and selling prices, the report added.
"Growth of the manufacturing sector slowed in June, as shown by the latest IHS Markit PMI survey, and reflects the impact of the second covid-19 wave upon the Indonesian manufacturing sector. That said, both production and sales growth remained at strong levels and it would be important to see the pandemic situation come under control soon so as not to further affect the performance of manufacturing firms," said IHS Markit Economics Associate Director Jingyi Pan in a press release on Thursday.
"On inflation, price pressures continued to build amid disruptions stemming from the second covid-19 wave. Input price inflation accelerated at a much faster pace compared to output charges and this suggests that firms could be under pressure as a result, and is an important area worth watching," the economist stated.
According to the report, Overall, firms maintained an optimistic outlook with regards to production in the next 12 months, with sentiment holding above the survey's historical average.
However, the report said, overall optimism did ease marginally from May amid concerns over the second wave of covid-19 and subsequent disruption across the sector.
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