JakartaPost-Aug 3
Indonesian manufacturers are increasingly cautious in their outlook as business confidence has fallen to a record low amid concerns over United States import tariffs. Experts warn that waning sentiment risks holding back investment. The latest manufacturing Purchasing Managers’ Index (PMI) report from S&P Global shows that producers’ expectations for business conditions in the coming year slumped sharply in July as confidence hit the lowest level since the series began in April 2012. Business confidence is an essential indicator to predict future behavior in the crucial sector, including decisions on investment, production expansion and employment policies, according to Permata Bank chief economist Josua Pardede. “In the short to medium term, weak business confidence could result in slower new investments in the manufacturing sector, which could adversely impact production and job creation,” he told The Jakarta Post on Friday. While current manufacturing activity improved as the headline PMI index rose to 49.2 in July from a reading of 46.9 in June, firms raised concerns that the US tariffs and reduced purchasing power on the part of clients would limit production volumes in the year ahead. Also, with a value below the 50-point threshold that separates expansion from contraction, the index remained in negative territory for a fourth consecutive month amid sustained weak output and demand. Usamah Bhatti, economist at S&P Global Market Intelligence, explained on Friday. “At the same time however, there was a renewed fall in new export orders, while firms remained in retrenchment mode as indicated by falling employment and purchasing levels,” he added. Companies bought fewer materials in July, citing lower production requirements as they tried to use up existing stock. This extended the decline in purchasing activity for four consecutive months. Read more at:
