Manufacturing PMI Rises, Apindo: Not Yet a Strong Recovery
The General Chair of the Indonesian Employers Association (Apindo), Shinta Widjaja Kamdani, stated that the achievement of Indonesia’s manufacturing Purchasing Managers’ Index (PMI) rising from 49.1 to 50.0 points serves as a signal of stabilisation following a period of contraction. However, Shinta noted that this cannot yet be interpreted as a fully strong and sustainable recovery.
“The 50.0 figure remains exactly on the threshold between contraction and expansion, so it must be viewed with caution. Even looking at the survey components, several indicators still show pressure, such as output falling for three consecutive months, a decrease in raw material purchases, reduced input inventories, a decline in labour, and an export contraction that is the deepest since August 2021. Therefore, we view the current condition more as a process of stabilisation rather than a solid expansion phase,” Shinta said on Wednesday.
As is known, the improvement in Indonesia’s manufacturing PMI in May 2026 was primarily supported by increasing domestic demand and new orders, which grew for two consecutive months. This indicates that the domestic market remains the primary buffer for national manufacturing activity.
Nevertheless, this improvement is not entirely uniform as external demand still faces significant pressure. Unstable global conditions, including geopolitical disruptions and slowdowns in several major markets, continue to weigh on Indonesia’s manufacturing export performance.
On the other hand, Shinta continued, the greatest challenge currently faced by the business community stems from the cost side. The PMI recorded input cost inflation at its highest level since 2013, driven by rising raw material prices, supply constraints, and global supply chain disruptions. In these conditions, industrial players are continuing to implement various efficiency measures, diversifying supply sources, strengthening inventory management, and increasing productivity to maintain competitiveness.
“However, cost pressures remain a serious concern, especially with the weakening of the Rupiah exchange rate, which increases the price of imported inputs. With approximately 70% of the requirements for raw materials and intermediate goods in the national industry still sourced from imports, exchange rate volatility has a direct impact on the production cost structure of manufacturing,” she explained.
As of early June 2026, the Rupiah continued to show a downward trend, moving above the level of Rp17,850 per US dollar. Therefore, Shinta emphasised that exchange rate stability will be a crucial factor in determining the sustainability of the manufacturing recovery moving forward.
“If the PMI can move more consistently into the expansion zone in the coming months, we expect sectors driven by domestic consumption to become the main engine of growth,” she said.
Shinta assessed that the food and beverage industry, as well as sectors related to household consumption and domestic investment activities, have the potential to show better performance. Additionally, sectors with a higher level of local content will be relatively more resilient to exchange rate pressures and global uncertainty.
“From the business perspective, optimism for the second half of 2026 has begun to improve compared to previous months. However, that optimism remains prudent and cautious. The business community sees opportunities from improving domestic demand, but at the same time, must still face high cost pressures, exchange rate volatility, global geopolitical uncertainty, and the weakening of export markets,” she added.
Consequently, the sustainability of the manufacturing recovery will depend heavily on the ability to maintain macroeconomic stability, strengthen public purchasing power, ensure the smooth supply of raw materials, and create an increasingly competitive investment and business climate for the national industrial sector.