Manufacturing Performance in Quarter IV/22 Projected to Slow down

manufacturing sector

Bank Indonesia estimates that the Indonesian manufacturing industry’s performance in the fourth quarter of 2022 will slow down. This figure is based on the Bank Indonesia’s Prompt Manufacturing Index (PMI-BI) latest Report that shows the performance fell to 53.18.

This figure fell moderately compared to the third quarter of 2022, with the index at the level of 53.71. The slowdown was experienced by some key components, including production volume and finished goods inventory volume.

“The production volume in the fourth quarter of 2022 is expected to slow down every quarter from 57.12 to 55.06,” BI wrote in its report, quoted Friday (14/10/2022).

Meanwhile, the decline in production volume occurred in the sub-sectors of transportation equipment, machinery and equipment, cement and non-metallic minerals, wood and other forest products, as well as food, beverages, and tobacco.

Furthermore, the slowdown in the volume of finished goods inventories is also estimated to slow from 55.78 percent to 52.85 percent. The decline occurred in the sub-sector of cement and non-metallic minerals, transportation equipment, machinery, equipment, wood, and other forest products.

Until the third quarter of 2022, PMI-BI was still in the expansion zone with a moderate increase every quarter from 53.61 percent to 53.72 percent.

The increase was driven by 3 main components in the processing industry, including production volume, finished goods inventory volume, and the number of workers.

Meanwhile, the increase occurred in some sub-sectors. With the highest index in the sub-sector of cement and non-metallic minerals at 58.91 percent, iron and steel base metals at 56.62 percent, and paper and printed matter at 55.63 percent.

The PMI development is in line with the development of manufacturing sector activities as a result of the BI business activity survey (SKDU) which increased with a weighted net balance (WNB) of 3.18 percent.

Referring to this performance, it is estimated that the processing industry’s performance in the fourth quarter of 2022 is still in the expansion zone, but not as high as the achievement in the third quarter of 2022.

PMI-BI in the fourth quarter of 2022 is projected to fall to the level of 53.18 percent. However, several components such as order volume, production, finished goods inventory, and receipt of input orders are expected to remain in the expansion zone.

Some of the sub-sectors that are predicted to increase include basic metals and steel by 58.54 percent, as well as fertilizers, chemicals, and rubber products by 52.37 percent.

Meanwhile, the transportation equipment and equipment subsector is forecasted to contract. The performance of the transportation equipment and equipment sub-sector is estimated to be outside the expansion zone, which is 49.63 percent.