Jakarta. Indonesia's manufacturing sector has returned to growth in August, thanks to improving business confidence and rising demand for exports, according to the Nikkei Indonesia Manufacturing Purchasing Managers' Index report, released on Monday (09/04).
The PMI is penciled in at 50.7 after two consecutive months of decline. Any figure above 50 represents an increasing growth rate in the manufacturing sector for the month. July's index of 48.6 was the lowest reading for this year.
"Business conditions in Indonesia improved midway through the third quarter as companies benefited from stronger demand for their goods from domestic and externally based clients," Pollyanna De Lima, principal economist at IHS Markit, the research firm that conducts the survey, said in a statement.
IHS Markit said manufacturing production rose in August for the first time since May, in line with an upturn in new export orders, which clocked their second-quickest pace in the six-and-a-half years of the PMI survey's history.
Raw material purchases increased and a contraction in payroll numbers slowed down last month, further cementing the case for manufacturing expansion, IHS Markit said.
Manufacturers face scarcity in raw materials, reflected in increased purchasing costs, but they were able to pass some of the costs to their clients.
"The rebound from July's downturn lifted spirits among firms, who are more cheerful about the year-ahead outlook than they were in the previous survey period," she said.