Jayanty Nada Shofa, Jakarta – Indonesia losing its 34-month streak of an expanding manufacturing purchasing managers index (PMI) has worried President Joko "Jokowi" Widodo.

The manufacturing PMI gives a portrait of how robust the factory activities are in a country. A reading of beyond 50 points shows that the manufacturing sector is expanding compared to the previous month. Anything below that means a deteriorating manufacturing sector.

S&P Global recently reported that Indonesia's manufacturing PMI had dropped to 49.3 in July. At a cabinet meeting held in the new capital Nusantara, Jokowi ordered his ministers to find out what had caused the decline.

"We enjoyed an expanding manufacturing sector for 34 months in a row, but now our manufacturing PMI contracted in July. This is something that all of us need to watch out for," Jokowi told his ministers.

According to Jokowi, it is not just Indonesia that is witnessing weaker manufacturing activities. As a case in point, China's manufacturing PMI went down from 49.8 in July, compared to 51.8 the month before. Likewise, Japan and Malaysia's manufacturing PMI were also in the negative territory last month, standing at 49.2 and 49.7, respectively.

"I want to know what really caused the decline, and this is something that we have to anticipate. Our manufacturing PMI has been going down these past four months," Jokowi said.

The contraction in July marked the first time that Indonesia's manufacturing PMI slipped into negative territory since August 2021.

The decline reflected a drop in outputs and new orders. Jokowi listed several possible reasons for weakening domestic demand that led to the contracting PMI, among others, the high raw material imports and fluctuating rupiahs.

Jokowi also instructed his government to look for new markets, saying that Indonesia's main trading partners could be facing slower growth. Disrupted global supply chains could have also led to the weakening of exports, according to the president.

S&P Global data showed that Indonesia's manufacturing PMI had been on a downtrend these past few months. The manufacturing PMI stood at 52.9 in April, down from 54.2 the previous month. It later dropped to 52.1 in May, and eventually 50.7 points the following month before hitting 49.3 in July.

Source: https://jakartaglobe.id/business/jokowi-worried-about-indonesias-declining-manufacturing-pm