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Indonesian manufacturing activity grew for the first time in four months in January as domestic demand drove increases in output and new orders.

The Nikkei/Markit manufacturing purchasing managers’ index for Indonesia rose to 50.4 in January, up from 49 in December and breaking back above the 50-point mark separating growth from contraction.

Output rose for the first time in four months at Indonesia’s factories in January, as new orders resumed expansion to snap their own three-month streak of contraction with mild growth.

Companies surveyed credited improved marketing and consumer confidence for the fillip. However, contraction of export orders for a fourth straight month suggested the recovery in demand was chiefly domestically driven as low demand and intense competition abroad persisted.

Markit economist Pollyanna De Lima said:

Looking ahead, the trend for trade will remain challenging given so much uncertainty surrounding the global economy. On the other hand, recent moves by Bank Indonesia to lower interest rates are likely to fuel consumer spending.”

Average input costs also rose last month at the fastest rate since November 2015, which companies passed on to clients by raising output prices at the quickest pace in 11 months. While employment fell slightly for the period, over 80 per cent of businesses surveyed expected output to rise in the coming 12 months.

Copyright The Financial Times Limited 2017. All rights reserved.
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