Bank Indonesia Reveals Manufacturing Industry at Expansionary Level, Here's the Explanation

Bank Indonesia (BI) has announced that the performance of the manufacturing industry sector in Indonesia remained stable during the second quarter of 2026. This is reflected in the Prompt Manufacturing Index (PMI-BI) result, which remained above 50, indicating an expansionary condition. “The performance of the manufacturing industry sector in the second quarter of 2026 was in an expansion phase (index > 50), reflected by the PMI-BI of 51.43,” said Head of the BI Communication Department, Ramdan Denny Prakoso, in a statement on Friday (17/7/2026). Although in an expansion phase, the PMI-BI achievement in the second quarter of 2026 was lower compared to the previous quarter, which was recorded at 52.03. Denny explained that based on its constituent components, the majority of components were in the expansion phase, namely production volume, finished goods inventory volume, and total order volume. Meanwhile, the employment and speed of input goods delivery components were in the contraction zone. In the second quarter of 2026, the production volume component was indicated to be in the expansion zone with an index of 53.81, lower than the previous quarter’s 54.07. The maintained performance of production volume was in line with sustained public demand, supported by the continued strength of total order volume, high finished goods inventory volume, and the availability of production facilities. The performance of total order volume in the second quarter of 2026 was also indicated to be in the expansion phase, reflected by an index of 52.77. However, this figure was lower compared to the first quarter of 2026, which was 53.20. The maintained total order volume was also supported by sufficient goods, reflected by the high volume of finished goods inventory. The finished goods inventory volume component in the second quarter of 2026 was indicated to be in the expansion phase with an index of 53.00, also lower than the previous quarter’s 54.43. Meanwhile, the employment component in the second quarter of 2026 was recorded at 48.65, lower than the previous quarter’s 48.76. Furthermore, the speed of input goods delivery component in the second quarter of 2026 remained in the contraction zone with an index of 47.46. This figure was lower than the previous quarter’s 49.06. Based on sub-sectors, the majority were also in the expansion phase. The highest index was in the machinery and equipment industry (58.24), followed by the food and beverage industry (54.05), the base metal industry (53.59), and the non-metallic mineral products industry (53.22). “In the third quarter of 2026, the performance of the manufacturing industry sector is expected to increase and remain in the expansion phase, reflected by a PMI-BI of 52.32. The expansion is mainly driven by production volume, finished goods inventory volume, and total order volume,” Denny continued. The majority of sub-sectors in the third quarter of 2026 are also expected to be in the expansion phase, with the highest index in the machinery and equipment industry (56.62), followed by the tobacco processing industry (56.00), the base metal industry (55.87), and the transport equipment industry (55.44). The PMI-BI is a composite indicator compiled to provide a general overview of the industrial sector conditions in Indonesia based on the Business Activity Survey (SKDU). The PMI-BI data is obtained from five components: production output, total order volume, finished goods inventory, employment, and speed of input goods delivery. The PMI-BI calculation is a pre-assessment benchmarked against the Purchasing Managers’ Index (PMI). An index above 50 indicates business expansion, while an index below 50 indicates contraction.