Indonesia's Manufacturing PMI Contracts to 46.9 in June

The Indonesian manufacturing Purchasing Managers’ Index (PMI) contracted to 46.9 in June, down from 50.0 in May, according to a report by rating agency Standard & Poor’s Global. The contraction was driven by a decline in demand for Indonesian manufactured goods. The rate of decline in new orders was the strongest in a year, prompting the sharpest reduction in output since April 2025. S&P Global Market Intelligence economist Usamah Bhatti noted that the downturn was accompanied by a substantial increase in average cost burdens, with the rate of input price inflation being the highest since September 2013. This marked the second-highest rate of inflation in the survey’s history, leading to the steepest rise in factory gate prices in nearly 13 years. The negative demand trend caused firms to reduce output for the fourth consecutive month. Weakening production requirements and demand also hampered inventory building, resulting in a faster depletion of finished goods stocks compared to May. In response to these conditions, manufacturers significantly reduced their workforce numbers, with the rate of job cuts accelerating to the fastest pace since September 2021. Companies also scaled back purchasing activity and inventories amid the weakening demand environment.