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View all search resultsRI factories slide into contraction in June amid soaring costs, weak demand
The S&P Global Indonesia Manufacturing PMI plunged to 46.9 in June from 50.0 in May, which is also the threshold that separates expansion from contraction, signaling a fresh decline in the health of the goods-producing sector.
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Boxes of battery cells are seen stored for shipment on Aug. 28, 2024, at a battery manufacturing plant at PT HLI Green Power in Karawang, West Java. (AFP/Yasuyoshi Chiba)
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ollapsing demand and the fastest rise in factory-gate prices in nearly 13 years have sent Indonesia’s manufacturing sector into its sharpest contraction in a year at the close of the second quarter, according to the latest purchasing managers’ index (PMI) data.
The S&P Global Indonesia Manufacturing PMI plunged to 46.9 in June from 50.0 in May, which is also the threshold that separates expansion from contraction, signaling a fresh decline in the health of the goods-producing sector.
A renewed decline in new orders drove the slump, with total demand falling for the first time in three months and at the fastest pace in a year.
Panel members attributed the weakness to eroding consumer purchasing power, as persistent price pressures choked off demand. The decline in new export orders was equally grim, recording the steepest drop since August 2021 as higher prices made Indonesian goods less competitive in international markets.
Production volumes contracted for a fourth consecutive month, falling at a rate not seen since April 2025. Manufacturers responded by slashing workforce numbers and reducing purchasing activity.
The pace of job shedding was the most severe since September 2021, while input buying fell for the fourth month in a row, and at the sharpest rate in nearly five years.
Compounding the sector’s woes, cost pressures remained historically elevated. Input price inflation accelerated to its most pronounced level since September 2013, registering the second-highest rate in the survey’s history. Manufacturers widely cited surging raw material prices as the primary driver.
