Industrial production measures output from the manufacturing sector. Some countries might also include the mining and utilities sectors in its calculation.
In Indonesia, the statistic only covers manufacturing output and manufacturing services. It also excludes output from small businesses (with fewer than 19 workers).
Industrial production is an important economic indicator. In several countries, such as Indonesia, the manufacturing sector contributes significantly to economic output. Also, the sector employs thousands of workers. Output supplies goods for domestic consumption and exports. Therefore, its change gauges economic activity in a country.
Industrial output is relatively sensitive to interest rates and consumer demand. The central bank also uses its figures to measure inflation. High levels of output can lead to uncontrolled consumption levels and rapid inflation.