Factory Activity Slips to 49.8 on Output Drop, but Business\nConfidence Rebounds to 7-Month High<\/p>\n
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JAKARTA, Investortrust.id \u2014 Factory activity in Southeast Asia\u2019s\nlargest economy slipped back into contraction territory in August, as\nrenewed drops in production and payroll numbers eclipsed a slight\nrevival in demand.<\/p>\n
The headline S&P Global Indonesia Manufacturing Purchasing\nManagers\u2019 Index (PMI) fell to 49.8 in August from 50.2 in July, crossing\nback below the critical 50.0 threshold that separates monthly expansion\nfrom contraction.<\/p>\n
Fragile Industrial Base Tests Regional Growth Momentum<\/p>\n
The slip into contraction highlights persistent demand headwinds\nacross emerging Asia\u2019s industrial hubs, where heightened price\ncompetition and cautious consumer spending continue to restrain output.\nWith factories trimming headcounts and running down finished-goods\ninventories at a four-year record pace, sustained private investment\nwill rely heavily on whether domestic order books gain real traction in\nthe second half of the year.<\/p>\n
Production and factory payrolls shrank again in August, marking\ndeclines in five of the last six survey periods. Manufacturers\nattributed the output cuts to intense market competition, sluggish\nend-user purchasing power, and elevated raw material costs.<\/p>\n
\u201cThe latest PMI data pointed to a mild deterioration in the health of\nIndonesia\u2019s manufacturing sector, as renewed falls in output and\nemployment reversed the improvement recorded in the previous month,\u201d\nsaid Maryam Baluch, Economist at S&P Global Market Intelligence, in\nthe survey report released Tuesday (Sep.\u00a01, 2026). \u201cDemand conditions,\nmeanwhile, were broadly neutral.\u201d<\/p>\n
Order Books Stabilize While Inventories Plunge<\/p>\n
Despite the broader contraction, total new orders crossed back into\nexpansion for the first time in three months, supported by higher client\ninquiries at selected firms. Purchasing activity also halted a\nfive-month slide to finish broadly flat on the month.<\/p>\n
To manage cash flows, manufacturers aggressively drew down\npost-production stockpiles, driving finished-goods inventories down at\nthe joint-fastest rate in over four years, matching levels last seen in\nMay 2025.<\/p>\n
Easing Price Pressures Bolster Long-Term Outlook<\/p>\n
Operating conditions received relief from cooling cost pressures,\nwith input price and factory-gate charge inflation easing further across\nthe manufacturing base.<\/p>\n
The softer inflationary backdrop pushed twelve-month business\nexpectations to a seven-month high, reflecting broad industry optimism\nthat market conditions will stabilize.<\/p>\n
\u201cBusiness confidence also continued to recover from April, suggesting\nthat, despite the sector\u2019s muted overall performance, manufacturers\nremain hopeful that production will rise over the coming 12 months,\u201d\nMs.\u00a0Baluch added.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/factory-activity-slips-into-contraction-at-49-8-as-weak-output-hits-manufacturers-1788234691", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }