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View all search resultsFactories struggling amid muted demand, surging costs
Indonesia's manufacturing sector suffered its sharpest contraction in a year, with the PMI plunging to 46.9 in June as new orders dried up and factory-gate prices rose at the fastest pace in nearly 13 years, intensifying calls for government help.
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A worker installs the battery of a Hyundai IONIQ 5 electric car on April 6, 2023, at the Hyundai Motor Manufacturing Indonesia (HMMI) assembly plant in Cikarang, West Java. (JP/Rachmat Kurniawa)
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ndonesia's manufacturing sector suffered its sharpest contraction in a year as new orders dried up and factory-gate prices rose at the fastest pace in nearly 13 years, intensifying calls for government intervention.
The purchasing managers’ index (PMI) for Indonesia’s manufacturing sector plunged to 46.9 in June, according to data published by S&P Global on Wednesday. That marks a significant drop into from May, when the reading was exactly at the 50-point threshold that separates expansion from contraction.
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.
Saleh Husin, deputy chairman for industry at the Indonesian Chamber of Commerce and Industry (Kadin), said the report signaled a clear deterioration in operating conditions, driven by weakening demand from both the domestic and export markets.
He attributed the downturn largely to a disruption of global trade, geopolitical tensions and volatile energy prices, but also to domestic factors.
Indonesia's contraction was deeper than that of its ASEAN peers. The regional manufacturing PMI held at around 50.5, with Thailand, Vietnam, the Philippines and Malaysia managing to stay in expansion territory above the 50-point mark.
"This indicates that the pressures Indonesia is experiencing are not only external but also stem from domestic challenges," Saleh told The Jakarta Post on Thursday, citing weak domestic demand, high production and logistics costs and a failure to attract enough global investment.
