Indonesia manufacturing activity contracts for 8th month in May: survey

[JAKARTA] Indonesia's manufacturing activity contracted for the eighth straight month in May, with output, new orders and employment all stubbornly weak, a private survey showed on Monday.

The HSBC Markit purchasing manager's index (PMI) edged up to 47.1 in May from 46.7 in April but remained below 50, the level separating contraction from expansion.

Indonesian producers trimmed their purchasing levels to adjust for falling new orders, amid deteriorating economic conditions and softening demand. They shed workers for the 10th straight month.

"With output, new orders and employment remaining in contraction territory, there is nothing to suggest that manufacturing will turn the corner and stabilise soon, placing greater pressure on policymakers to act quickly to stimulate growth," said Pollyanna De Lima, economist at Markit.

May's new export orders index contracted to 40.2, the lowest figure since the beginning of April 2011, due to weaker demand, particularly from Europe, Asia and America. "Manufacturing appears to be acting as an increasing drag on the economy, raising the risk of a deepening contraction of GDP in the second quarter," Mr De Lima added.

Indonesia's economic growth in the first quarter slumped to its weakest annual pace since 2009, leaving its central bank in a bind as rising inflationary pressures and a faltering currency crimp its ability to jump-start Southeast Asia's biggest economy.

REUTERS