The IHS Markit Indonesia Manufacturing Purchasing Managers’ Index™ (PMI™) rose by almost eight points from 39.1 in June to 46.9 in July, its highest reading since February.
The PMI continued to regain lost ground from April's record low, but the latest reading remained below the 50.0 no-change level and indicated a further deterioration in the health of the sector.
"PMI data showed another marked easing in the downturn across Indonesia's manufacturing sector during July,
adding to hopes that the worst of the impact of the covid-19 pandemic was felt in the second quarter," IHS Markit principal economist Bernard Aw said in a media release on Monday
"Output, orders and employment indices all lifted from the lows seen in the second quarter, helped by a relaxation
of covid-19 containment measures," he added.
"However, the survey also points to a challenging recovery ahead. Firms continued to reduce factory employment at asharp rate, with many seeking to control costs and remain viable. The ongoing decline in backlogs of work also extended into July. "The need for ongoing social distancing at workplaces and public gatherings, as well as any potential surge in new infections, could also further delay output and sales from recovering to pre-pandemic levels" he explained.
Nevertheless, firms maintained their positive outlook about the year ahead with almost two-thirds of panellists expecting a rise in output over the next 12 months.
According to the survey, optimism was primarily based on expectations that the covid-19 situation will improve in the coming months.