Head of Economics at Trimegah Sekuritas Indonesia, Fakhrul Fulvian,\nassesses that the decline in Indonesia\u2019s manufacturing Purchasing\nManagers\u2019 Index (PMI) in April was more influenced by global supply\nchain disruptions.<\/p>\n
\u201cWe see a very clear divergence between advanced economies and ASEAN.\nThe United States (US) and Japan are actually experiencing manufacturing\nacceleration due to the safety stock building phenomenon, while ASEAN,\nincluding Indonesia, is starting to come under pressure from cost\ninflation and supply chain disruptions,\u201d he said in Jakarta on Monday\n(4\/5\/2026).<\/p>\n
The latest S&P Global data shows that Indonesia\u2019s manufacturing\nactivity has entered a contraction phase, with the PMI falling from 50.1\nin March to 49.1 in April. This decline marks the first contraction in\nthe last nine months and is occurring amid increasingly strong\ninflationary pressures, both globally and domestically.<\/p>\n
According to Fakhrul, the pressure on the manufacturing sector is\ncaused by a surge in input costs due to geopolitical conflicts that are\ndriving up raw material prices and supply limitations.<\/p>\n
This is reflected in the surge in production cost inflation to the\nhighest level in the last four years, which is then passed on to selling\nprices at the fastest rate in more than a decade.<\/p>\n
\u201cThis is a textbook case of cost-push inflation. When costs rise too\nquickly, producers have no choice but to reduce output or pass on prices\nto consumers. We see both happening simultaneously in April,\u201d Fakhrul\nexplained.<\/p>\n
On the other hand, although there was a slight increase in new\norders, this is considered not yet to reflect a healthy demand\nrecovery.<\/p>\n
\u201cThe increase in orders is more in the nature of front-loading,\nanticipating future price increases, not because of truly strong demand.\nThis is important to read carefully,\u201d he added.<\/p>\n
Furthermore, Fakhrul also highlighted that this PMI weakening is\noccurring alongside Indonesia\u2019s inflation recorded at 2.42 percent\nyear-on-year (yoy) in April 2026. Although still within the target\nrange, the dynamics in the manufacturing sector indicate emerging\npotential pressures ahead on input prices.<\/p>\n
\u201cHeadline inflation does indeed still appear controlled at 2.42\npercent, but pressures at the producer level are already rising\nsignificantly. This means there is potential for lagging pass-through to\nconsumer inflation in the coming months, especially due to rupiah\nweakness,\u201d he said.<\/p>\n
Furthermore, he emphasised that this situation creates policy\nchallenges that are not straightforward.<\/p>\n
\u201cWe are at a sensitive point. On one side, the real sector is\nstarting to weaken, but on the other side, price pressures are actually\nincreasing. This demands a more precise policy response, especially on\nthe monetary side and exchange rate stabilisation,\u201d said Fakhrul.<\/p>\n
In the regional context, Indonesia is not alone. The Philippines has\nalso entered the contraction zone, while Vietnam and Thailand are\nexperiencing significant slowdowns. Malaysia is the only country that is\nrelatively growing, driven by stockpiling activities.<\/p>\n
\u201cThis is not just Indonesia\u2019s story, this is ASEAN\u2019s story amid a\nchanging world. When advanced economies stockpile goods out of fear of\ninflation, developing countries have to bear those price increases,\u201d he\nconcluded.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/manufacturing-industry-under-pressure-pmi-enters-contraction-phase-1777899216", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }