Global rating agency Standard & Poor\u2019s Global Ratings (S&P)\nreported that Indonesia\u2019s manufacturing Purchasing Managers\u2019 Index (PMI)\nrose month-on-month to 50.0 in May 2026, returning to the expansion\nzone. The manufacturing PMI was recorded at 49.1 in April.<\/p>\n
During this fifth month, panellists noted that companies experienced\nan increase in orders, but simultaneously faced shortages of production\nraw materials. \u201cIndonesia\u2019s manufacturing economy remained under\npressure during May, as production was hampered by rising raw material\nprices and limited input availability,\u201d said Usamah Bhatting, an\neconomist at S&P Global Market Intelligence, in a written report on\nTuesday, 2 June 2026.<\/p>\n
New order receipts recorded an increase for the second consecutive\nmonth, with the highest growth rate since February. Demand performance\nwas primarily driven by improvements in domestic demand. Meanwhile,\nexport performance declined more sharply. International sales have\ndecreased for three consecutive months, with the sharpest contraction\nrate since August 2021. Panellists concluded that the war in the Middle\nEast and rising prices are weighing on global demand.<\/p>\n
Although demand persists, manufacturing industry performance is being\npressured by rising raw material prices, which are burdening corporate\nproduction. Consequently, the workforce has decreased following the\ndecline in production. Employment has continued to fall for three\nconsecutive months, although the decline was considered marginal.<\/p>\n
Panellists noted that production has declined for three consecutive\nmonths, albeit at a slower pace than in April. In terms of pricing,\ninput cost inflation was significant and rose again to its highest level\nduring the survey, following the position seen in September 2013.<\/p>\n
Panellists noted that the rise in raw material prices led to further\ncost increases. In May, companies attempted to pass these cost burdens\non to clients. Production prices rose at the fastest rate since October\n2013.<\/p>\n
Price increases and supply shortages hampered purchasing activities\nin Indonesia\u2019s manufacturing sector during May. Companies also reported\nhaving to utilise existing pre-production inventories amidst\ndifficulties in obtaining raw materials. Meanwhile, limited production\nhas also forced companies to use existing stock to fulfil orders.<\/p>\n
Regarding supply, average order fulfilment times have been extended\nfor eight consecutive months due to delivery delays and scarcity related\nto the war, which is weighing on supplier performance. Furthermore, the\nlevel of unfinished business increased for the first time since\nFebruary, driven by raw material constraints affecting the ability of\ncompanies to complete orders.<\/p>\n
However, companies remain confident that production growth will\nrecover within the next year, with optimism strengthening compared to\nApril. Nevertheless, the level of confidence remains unchanged.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/indonesian-manufacturing-performance-returns-to-expansion-zone-1780881272", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }