Indonesia's Manufacturing PMI Contracts to 46.9 in June

Rating agency Standard & Poor’s Global (S&P) reported that Indonesia’s manufacturing Purchasing Managers’ Index (PMI) contracted to a level of 46.9 in June 2026. This position represents a decline from the 50.0 level recorded in May.

The June decline was triggered by a drop in demand for Indonesian manufactured goods. “The rate of decline is the strongest in a year; the decrease in new incoming orders has caused the largest drop in output volume since April 2025,” said Usamah Bhatti, economist at S&P Global Market Intelligence, as cited in an S&P report on Wednesday, 1 July 2026.

S&P noted that Indonesian manufacturing showed a significant increase in average cost burdens. The input price inflation rate was the highest since September 2013. According to Usamah, this inflation rate is the second highest in history and has driven the strongest increase in factory selling prices in almost 13 years.

Meanwhile, the negative demand trend has prompted companies to reduce output for four consecutive months, marking the sharpest decline since April 2025. The decrease in production needs and demand also hindered stock accumulation, resulting in finished goods inventories declining for the second consecutive month at a faster rate than in May.

These conditions have also led manufacturers to reduce their workforce. S&P noted that the rate of layoffs in June was the largest since September 2021. “In response to these conditions, companies are reducing their workforce and significantly cutting back on purchasing activities, while inventories are also declining alongside weakening demand conditions,” said Usamah.