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Indonesian March manufacturing activity contracts to record low

[JAKARTA] Indonesia's manufacturing activity contracted for the sixth straight month in March, with output and new orders dropping at the fastest rate on record, a private-sector survey showed on Wednesday.

The HSBC Markit Purchasing Managers' Index (PMI) fell to 46.4 in March from 47.5 in February. That is the lowest reading since the survey started in April 2011.

A reading below 50.0 signals contraction in activity.

New orders fell for the sixth straight month, with respondents citing softer domestic and export demand and the impact of heavy rain as the main factors behind the decline.

In light of weaker demand, companies shed jobs for the eight straight month.

Companies also reported rising costs as the depreciation of the rupiah pushed up import prices of raw materials such as metals, chemical and plastics, though some firms were able to increase selling prices, offsetting pressure on profit margins, said Pollyanna De Lima, economist at Markit.

"On the one hand, the weaker currency is expected to support growth of new orders from overseas market in coming months, but on the other hand companies have been facing rising import costs," Mr De Lima added.


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