Bank Indonesia: Business Survey - 3Q 2017

Transcription

1. BUSINESS SURVEY Business Survey QUARTER III-2017  The latest Bank Indonesia Business Survey revealed that businesses reported to maintain positive growth in the third quarter of 2017, with slower gains mirroring historical trends. It was reflected by a decline in the weighted net balance (WNB) from 17.36% to 14.32%. All economic sectors reported increasing business activity in the third quarter of 2017, especially the services sector (WNB 3.78%), followed by the financial, real estate and corporate services sector (WNB 3.18%). Meanwhile, manufacturing industry performance continued to improve in the third quarter of 2017, with a WNB of 1.76%. Such developments were in line with third quarter PMI-BIBS data, reading expansionary at 50.51%, driven by production volume.  Consistent with business growth, labour utilisation continued to increase in the reporting period as the pace slowed, with a WNB of 0.13%, decelerating from 4.23% in the second quarter of 2017. Financially, businesses maintained sound liquidity and profitability indicators, with relatively easier access to credit reported.  Businesses maintained a positive outlook going into the fourth quarter, evidenced by a WNB of 7.63%. Nevertheless, the WNB had nearly halved from 14.32% in the previous period. Limited business growth was caused by seasonal factors triggering a contraction in the agricultural, plantation, livestock, forestry and fisheries sector. A. Business Activity Businesses reported to maintain positive growth in the third quarter, with slower gains mirroring historical trends. Businesses reported to maintain positive growth in the third quarter, with slower gains mirroring historical trends. It was reflected by a decline in the WNB from 17.36% to 14.32% (Graph 1). All economic sectors reported increasing business activity in the third quarter of 2017, especially the services sector (WNB up from 3.38% to 3.78%), followed by the financial, real estate and corporate services sector (WNB up from 3.11% to 3.18%). Furthermore, the mining sector successful reversed the previous contraction (WNB -1.63%) to expand with a positive WNB of 1.60%. The trade, hotels and restaurants sector (WNB 1.94%) also improved in the reporting period, along with the manufacturing industry (WNB 1.76%) as well as the transportation and communication sector (WNB 0.72%). Nevertheless, the gains posted by those three sectors were down on the previous quarter as the seasonal effect on demand of Ramadan, Eid-ul-Fitr and the school holidays faded. Methodology The Business Survey has been conducted quarterly since the first quarter of 1993. In Quarter III-2017, the Survey was extended to 3,039 enterprises spread throughout all regions of the Indonesian archipelago, selected using purposive sampling. Statistically, the respondents have a sampling error of 2% at a 5% level of significance. Data is collated through respondent questionnaires either by hardcopy or by online on BI website. The data is calculated using the net balance method, namely by calculating the difference between the percentage of respondents whose answers increased, those whose answers decreased and those whose answers remained the same. In the case of calculating the net balance of business activity, selling price and labour utilization are calculated using the net weighted balance method. The weight reflected the contribution of each sector to GDP. Since Quarter I-2014, the Survey has been conducted in the last month of the current quarter (one month earlier than usual). In addition, the questionnaire improvement and integrated web-based application both were developed. Real Sector Statistics Division 1
2. Business Survey Graph 1 . Business Activity Respondents predicted the performance gains to decelerate in the fourth quarter of 2017. Respondents predicted the performance gains to decelerate in the fourth quarter of 2017, as the WNB nearly halved from 14.32% to 7.63%. Businesses from six of the nine economic sectors surveyed reported increasing activity, particularly in the financial, real estate and corporate services sector (WNB 2.89%) and the services sector (WNB 2.59%). In contrast, respondents from the agricultural, plantation, livestock, forestry and fisheries sector expected a contraction (WNB -2.26%) after completing the harvesting season, with conditions exacerbated by inclement weather. B. Production Capacity Average production capacity utilisation decreased on the previous period. Average production capacity utilisation decreased. The Business Survey revealed that, in line with the downturn of business activity, average production capacity utilisation decreased from 77.06% to 75.99% (Graph 2). Described by economic sector, respondents from electricity, gas and water supply sector reported the highest production capacity utilisation, averaging 81.21%, contrasting the lowest reported by the mining and quarrying sector, averaging 73.73%. Graph 2. Capacity Utilisation Real Sector Statistics Division 2
3. Business Survey C . Financial Condition and Access to Credit Third quarter corporate liquidity and profitability remained solid, with comparatively easy access to credit reported. In general, corporate sector financial performance improved during the third quarter of 2017, reflecting a net balance (NB) of 37.86%, up from 37.69% in the previous period. Most respondents (54.46%) confirmed sound third-quarter liquidity conditions, while 41.70% thought that liquidity conditions had improved and just 3.84% stated that liquidity had declined on the previous period. Furthermore, the survey also revealed that businesses were more profitable in the reporting period, with the corresponding NB increasing from 41.25% to 41.41%. More than half (52.77%) of respondents acknowledged that corporate profitability remained stable, while 44.32% confirmed that profitability had increased and just 2.91% suffered a decline in profitability on the previous period. In terms of access to credit, the Business Survey demonstrated that access to bank loans was generally considered normal, with the NB for the period increasing from 7.41% to 8.72%. Consistent with maintained financial conditions, most businesses (69.06%) acknowledged that access to bank loans was normal, while 19.83% thought access to credit had improved and 11.11% argued that access to loans was becoming more difficult compared to conditions three months earlier. D. Labour Utilisation The upward trend of labour utilisation slowed in the third quarter of 2017. In line with ongoing business expansion, labour utilisation continued to increase in the reporting period, albeit more slowly than in the previous period. Such developments were corroborated by a WNB of 0.13%, decelerating from 4.23% in the second quarter of 2017. Most of the labour was absorbed by the mining and quarrying sector (WNB 0.91%), followed by the financial, real estate and corporate services sector (WNB 0.72%) and the services sector (WNB 0.33%). Graph 3. Labour Utilisation Real Sector Statistics Division 3
4. Business Survey Fourth quarter labour utilisation was indicated to grow but at a slower pace , with the WNB decelerating from 0.13% to 0.09%. Nevertheless, most labour utilisation was predicted in the financial, real estate and corporate services sector (WNB 0.72%) as well as the transportation and communication sector (WNB 0.62%), contrasting the declines expected in the manufacturing industry (WNB -0.75%), the trade, hotels and restaurants sector (WNB -0.47%) as well as the mining and quarrying sector (WNB -0.14). E. Selling Prices Respondents reported a build-up of inflationary pressures. The survey revealed a build-up of inflationary pressures in the third quarter of 2017, reflecting an increase in the WNB from 9.92% to 12.03%. Respondents in the trade, hotels and restaurants sector experienced the most intense inflationary pressures (WNB 2.83%), followed by the agricultural, plantation, livestock, forestry and fisheries sector (WNB 2.25%) as well as the mining and quarrying sector (WNB 2.13%), which the respondents blamed on the rising cost of raw materials. Graph 4. Selling Price Respondents expected inflationary pressures to continue accumulating in the fourth quarter, with the WNB climbing to 12.84%. The trade, hotels and restaurants sector was expected to be most affected by rising prices (WNB 3.68%), followed by the manufacturing industry (WNB 3.49%) and the agricultural, plantation, livestock, forestry and fisheries sector (WNB 2.42%). In general, the respondents cited rising raw material prices, energy costs as well as prevailing interest rate and exchange rate developments as the main drivers of inflation in the fourth quarter of the year. F. Inflation Respondents predicted inflation in 2017 at 3.24%. On average, respondents predicted inflation in 2017 at 3.24% (yoy), up from actual inflation realised in 2016 at 3.02% (yoy) but still within the target corridor for 2017 at 4.0±1%. By economic sector, respondents from the services sector as well as the construction sector predicted the highest inflation rates at 4.03% (yoy) and 3.67% (yoy) respectively. Real Sector Statistics Division 4
5. Business Survey G . Investment Businesses reported stronger third quarter investment activity, reflecting Businesses were more inclined to invest in the third quarter of 2017. growth in the WNB from 10.58% to 10.66%. The financial, real estate and corporate services sector as well as the services sector were the main drivers of investment growth, indicated by a WNB of 2.02% and 1.97% respectively (Appendix Table 7). In addition, businesses expected more investment activity in the fourth quarter of 2017, as the WNB increased again to 11.86%, with the financial, real estate and corporate services sector as well as the services sector again pushing investment (WNB 2.28% and 2.09%). H. PMI PMI PMI BIBS data showed that the ongoing manufacturing industry expansion was more muted in the third quarter of 2017. Bank Indonesia Business Survey (PMI-BIBS)* BIBS data showed that the current manufacturing industry expansion slowed in the third quarter of 2017, with the index dropping from 51.68% to 50.51% (Graph 5). Slower expansion is consistent with business growth in the manufacturing industry, which also decelerated from 3.81% to 1.76% (WNB). Based on the components of PMI-BIBS, manufacturing industry performance in the third quarter was driven by production volume, index of 54.78%, while the four other components slipped into a contractionary phase, the deepest being the employment level index (48.29%), followed by the finished goods inventories (48.64%). Respondents expected manufacturing industry performance to contract in the fourth quarter of 2017, with the PMI-BIBS dipping to 49.93%. The manufacturing industry contraction is consistent with the fourth quarter downturn currently predicted (WNB -0.04%). By component, respondents expected the contraction to stem from the speed of supplier deliveries (WNB 49.07%), employment level (49.53%) and finished goods inventories (49.69%). Graph 5. PMI - BIBS --------------------*) PMI-BIBS represents a composite indicator designed to provide an overview of manufacturing sector performance in Indonesia. PMI-BIBS is a composite index comprised of five other indices, namely new order volume (input), production volume (output), employment, supplier delivery times and inventory. PMI calculation is based on a pre-assessment of benchmarked Purchasing Manufacturing Indices from a number of other countries. An index reading of above 50 signals Real Sector Statistics Division business expansion, while a reading of below 50 indicates a contraction. 5
6. Business Survey Graph 6 . PMI-BIBS Indicators Production Volume Index Percentage Response in Q III-2017 Inventory Index Order Volume Index Supplier Delivery Time Index Real Sector Statistics Division 6
7. Business Survey Labour Index I . Wages and Salaries In general, wages/salaries have remained relatively stable throughout the year. The vast majority (79.80%) of respondents confirmed that wages/salaries had remained stable in the first and second semesters of 2017, while 19.23% acknowledged that wages/salaries had increased and just 0.97% admitted that wages/salaries had decreased. By economic sector, the largest increase on wages/salaries in the second semester was paid by the financial, real estate and corporate services sector (NB 29.67%), followed by the transportation and communication sector (NB 20.61%) and the manufacturing industry (NB 20.52%). The average wage/salary paid for a foreman/supervisor position in the second semester of 2017 was confirmed at Rp4.2 million per month and Rp2.7 million per month for employees below that level, which is relatively stable on the previous period. By economic sector, the financial, real estate and corporate services sector paid the highest salaries/wages, with foreman/supervisor positions receiving Rp5.3 million per month. For employees below that level, the utilities sector paid the highest salaries/wages at Rp3.3 million per month. Looking ahead to the first Expected Increasing on Wages/Salaries in Semester I-2018 (%) half of next year, respondents Sectors Increasing Wages/Salaries expected to see an average Agriculture, livestock, forestry and fisheries 8.09% increase Mining and Quarrying 4.17% Manufacturing Industry 7.16% Utilities (electricity, gas and water) 7.36% Construction 8.08% Trade, hotels and restaurants 9.29% Transport and Communication 8.61% of wages/salaries. 7.97% By in economic sector, the services sector was planning the largest pay increase, averaging 10.69%, followed by the trade, hotels and restaurants sector (9.29%) as well as the Financial, real estate and corporate services 8.29% Services 10.69% Average 7.97% transportation and communication sector (8.61%). According to 34.87% of the respondents, the policy to increase wages/salaries in the new year was based on the minimum wage, while also considering employee productivity and the business outlook. Real Sector Statistics Division 7
8. Business Survey I . Margin Businesses have posted average margins of 19.28% in the second semester of 2017, up from 18.50% in the first half of the year. Based on economic sector, the transportation and communication sector registered the highest margins, averaging 20.92%, followed by the agricultural, plantation, livestock, forestry and fisheries sector (20.76%) as well as the trade, hotels and restaurants sector (20.45%). Respondents confirmed that margins remained above the minimum required for business continuity at 12.73%. Businesses operating in the services sector posted the highest margins relative to the minimum required, at 9.19%, followed by the transportation and communication sector (7.76%) as well as the agricultural, plantation, livestock, forestry and fisheries sector (7.47%). Real Sector Statistics Division 8
9. Appendix Table 1 . Business Activity (Weighted Net Balance - WNB) SECTORS Agriculture, livestock, forestry and fisheries 2014 QI 2.14 2015 Q II Q III QIV QI Q II 2.10 0.81 1.63 1.94 2016 Q III QIV QI Q II 2017 Q III QIV QI Q II Q III QIV* 1.12 -0.17 -0.70 1.03 2.38 1.75 -4.07 1.98 1.57 0.40 Mining and Quarrying -3.38 1.03 -3.30 -1.76 -1.12 -1.03 -0.34 -1.18 -1.30 1.69 0.44 -1.82 -2.14 -1.63 1.60 1.44 Manufacturing Industry -2.65 3.39 1.36 1.76 -0.72 1.91 -0.84 -0.34 -0.77 3.41 1.09 1.44 -0.58 3.81 1.76 -0.04 0.26 Utilities (electricity, gas and water) -2.26 0.19 0.28 0.26 0.25 0.20 0.26 0.19 0.19 0.17 0.24 0.25 0.28 0.38 0.31 0.26 Construction -0.67 0.42 1.03 0.57 -0.16 0.37 0.22 0.22 0.59 0.20 0.90 0.88 -0.35 0.68 0.67 1.02 Trade, hotels and restaurants -0.19 4.04 4.02 2.44 -0.35 0.47 -0.54 0.10 -0.48 3.69 1.64 0.75 -0.99 4.32 1.94 -0.24 Transport and Communication -0.11 1.19 1.46 0.78 0.34 3.16 2.04 1.52 2.10 1.87 1.11 0.95 0.32 1.81 0.72 1.95 Financial, real estate and corporate services 2.47 3.65 3.29 3.39 2.53 2.92 1.93 2.10 1.77 2.58 2.45 2.47 2.31 3.11 3.18 2.89 Services 4.32 4.96 2.33 2.07 2.18 2.72 2.57 1.10 2.69 2.34 3.58 2.26 3.87 3.38 3.78 2.59 4.83 11.90 5.06 3.02 5.80 18.40 13.20 3.13 4.80 17.36 14.32 7.63 TOTAL 2.11 21.05 11.25 11.13 * Expectation Table 2. Production Capacity Utilisation (%) 2014 S E C T O R S 2015 2016 2017 QI Q II Q III Q IV QI QII QIII QIV QI QII QIII QIV QI QII QIII 79.48 75.94 78.29 81.76 71.74 79.15 78.74 76.76 78.21 77.12 77.63 75.65 74.84 77.01 74.48 - Farm Food Crops 84.18 81.45 80.43 82.91 80.77 83.60 82.24 77.74 82.39 82.94 79.48 79.48 76.81 81.66 77.00 - Non-food Crops 77.75 77.40 80.58 81.65 73.26 78.60 77.73 75.06 75.12 74.27 73.09 73.09 78.51 77.41 74.10 - Livestock & Products 84.74 77.13 77.13 81.29 79.27 86.74 82.76 80.34 86.81 82.29 80.11 76.50 72.41 73.97 76.75 - Forestry 80.35 65.92 76.21 81.60 63.64 78.89 76.55 76.18 78.57 75.26 78.83 78.83 78.31 76.00 71.21 - Fishery 70.39 77.82 77.11 81.33 61.75 67.93 74.44 74.50 68.16 70.85 76.63 70.37 71.08 76.02 73.34 70.79 76.91 83.02 79.01 69.68 77.41 72.68 72.82 69.56 78.03 77.08 73.06 74.52 75.04 73.73 74.21 77.37 74.65 76.70 74.33 75.89 68.46 70.47 71.23 70.33 73.15 74.59 74.02 75.65 74.53 - Food, Beverages and Tobacco 74.66 77.83 75.06 79.37 75.54 77.35 73.80 76.64 75.92 77.43 75.30 76.58 75.15 76.84 74.13 - Textile, Leather products and Footwear 77.66 80.95 77.27 76.78 77.38 80.68 76.61 78.15 78.51 79.84 75.50 79.81 78.30 78.68 78.66 - Wood products & Other wood products 70.00 72.23 72.38 71.23 72.57 75.77 69.77 75.94 70.47 74.24 73.34 76.61 74.05 77.49 75.36 - Paper and Printing 68.57 73.61 76.59 83.91 74.96 76.75 79.50 78.45 72.58 80.06 72.97 72.97 69.37 75.74 74.97 - Fertilizers, Chemicals and Rubber products 77.22 75.16 76.17 78.52 74.74 78.63 78.59 76.35 73.32 72.83 77.81 77.81 75.84 74.30 75.63 - Cement and Non metalic mineral products 83.14 69.38 71.73 74.55 76.16 80.41 85.39 87.29 75.21 77.50 77.11 69.90 73.26 73.17 73.50 - Iron and Basic steel 68.54 74.16 71.49 74.47 66.88 72.60 64.29 69.29 64.59 65.53 62.55 69.43 68.87 73.79 75.16 - Transport equipment, Machinery & Apparatus 72.41 77.70 76.11 72.11 73.72 64.26 71.26 68.42 65.52 68.78 68.42 71.55 76.04 74.00 69.67 - Other manufacturing products 72.15 75.72 75.02 79.33 76.98 76.55 75.41 79.12 76.18 77.12 75.31 76.62 75.34 76.86 73.69 77.67 77.67 76.75 81.65 76.51 78.84 81.56 80.88 83.98 82.56 76.98 81.81 83.70 80.53 81.21 75.54 76.97 78.18 79.78 73.06 77.82 75.36 75.23 75.75 77.01 76.21 76.28 76.92 77.06 75.99 AGRICULTURE, LIVESTOCK, FORESTRY & FISHERY MINING & QUARRYING MANUFACTURING INDUSTRY ELECTRICITY, GAS AND WATER SUPPLY TOTAL Table 3. Other Indicators (Net Balance - NB) Real Sector Statistics Division 9
10. Table 4 . Labour Utilisation (Weighted Net Balance WNB) * Expectation Table 5. Selling Price (Weighted Net Balance WNB) * Expectation Table 6. Annual Inflation Expectations (% of respondents) Real Sector Statistics Division 10
11. Table 7 . Realisation of Investment** (Weighted Net Balance WNB) * Expectation ** Realisation of investment start to be asked since QI-2014 Table 8. PMI - BIBS (%) Komponen PMI - SKDU Period 2011 2012 2013 2014 2015 2016 2017 Production Level New Orders from Customers Speed of Suppliers Deliveries Inventories Employment Level PMI - SKDU I 49.11 46.18 46.67 48.70 46.42 47.28 II 56.35 49.91 48.43 49.48 50.61 51.40 III 54.21 50.51 47.98 49.58 48.91 50.64 IV 53.89 51.07 47.18 48.44 49.22 50.56 I 51.15 47.51 47.07 47.96 49.73 48.85 II 59.64 51.39 47.57 50.26 51.65 52.82 III 50.00 48.86 47.36 50.26 49.47 49.18 IV 54.51 49.08 46.78 49.54 46.69 49.66 I 50.18 45.41 45.76 48.23 46.64 47.18 II 59.86 50.10 48.51 50.80 50.10 52.37 III 51.12 49.23 47.41 48.97 47.07 48.97 IV 57.99 55.17 47.37 50.66 48.87 52.99 I 49.83 46.66 48.63 49.74 49.40 48.60 II 59.80 50.00 48.47 51.38 50.38 52.43 III 52.78 47.29 48.24 50.37 48.98 49.45 IV 53.25 45.93 47.20 49.73 48.73 48.89 I 41.89 45.08 45.12 49.87 46.04 44.96 II 60.03 44.96 47.75 50.39 47.91 50.28 III 46.32 45.94 46.32 49.34 46.10 46.46 IV 52.64 45.11 47.67 49.02 47.44 48.23 I 47.20 45.21 47.35 49.04 46.61 46.69 II 59.08 50.22 48.39 52.42 50.22 52.38 III 52.39 47.01 48.28 48.95 47.01 48.74 IV 55.12 51.04 48.64 48.08 48.56 50.91 I 47.70 48.17 48.31 49.16 48.62 47.93 II 57.53 48.23 49.41 50.74 51.70 51.68 III 54.78 49.79 49.07 48.64 48.29 50.51 IV* 51.01 49.79 49.07 49.69 49.53 49.93 Real Sector Statistics Division 11
12. Table 9 . Wages and Salaries (%, Net Balance - NB) Semester I-2016 SECTORS Increasing Stable Semester II-2016 DecreasingNet Balance Increasing Stable Semester I-2017 DecreasingNet Balance Increasing Stable Semester II-2017 DecreasingNet Balance Increasing Stable DecreasingNet Balance Agriculture, livestock, forestry and fisheries 32.08 66.51 1.41 30.68 16.02 79.86 4.12 11.90 38.19 60.06 1.75 36.44 15.89 83.62 0.49 15.40 Mining and Quarrying 30.23 54.65 15.12 15.12 20.24 72.62 7.14 13.10 30.77 67.69 1.54 29.23 17.65 79.41 2.94 14.71 Manufacturing Industry 48.79 50.60 0.60 48.19 22.43 76.19 1.38 21.04 51.42 47.63 0.95 50.47 20.52 78.12 1.37 19.15 Utilities (electricity, gas and water) 40.82 58.16 1.02 39.80 21.35 78.65 0.00 21.35 35.37 63.41 1.22 34.15 13.13 85.86 1.01 12.12 Construction 33.69 60.96 5.35 28.34 19.53 78.70 1.78 17.75 41.38 55.17 3.45 37.93 14.29 84.66 1.06 13.23 Trade, hotels and restaurants 51.73 46.47 1.80 49.94 20.96 78.03 1.01 19.95 54.89 44.96 0.14 54.75 18.39 80.72 0.89 17.50 Transport and Communication 43.42 54.82 1.75 41.67 17.17 80.69 2.15 15.02 42.64 56.35 1.02 41.62 20.61 78.95 0.44 20.18 Financial, real estate and corporate services 55.43 43.41 1.16 54.26 26.45 71.74 1.81 24.64 51.83 47.25 0.92 50.92 29.67 68.86 1.47 28.21 Services 44.10 54.87 1.03 43.08 19.02 80.98 0.00 19.02 42.14 57.86 0.00 42.14 17.16 82.84 0.00 17.16 45.21 52.84 1.95 43.25 20.55 77.60 1.85 18.70 47.57 51.45 0.98 46.59 19.23 79.80 0.97 18.25 TOTAL Table 10. Average Wages and Salaries (Rp) Table 11. Margin (%) Real Sector Statistics Division 12