Manufacturing PMI Shows Positive Signal, Kadin Warns Industry Recovery Not Yet Strong

The Indonesian Chamber of Commerce and Industry (Kadin) has stated that the return of manufacturing activity to an expansionary zone in July 2026 is a positive signal, but it cannot yet be used as an indicator that the national industrial sector has entered a strong recovery phase.

Data from S&P Global released on Monday showed the Indonesia Manufacturing Purchasing Managers’ Index (PMI) rose to 50.2 in July 2026, up from the previous month’s contraction. A reading above 50 indicates the manufacturing sector is expanding.

Wakil Ketua Umum Koordinator Bidang Perindustrian Kadin Indonesia, Saleh Husin, said the increase was driven by a return to growth in production volumes and improved domestic demand, which boosted new orders. However, he noted that the growth achieved was still relatively moderate.

“The increase in the PMI to 50.2 shows that manufacturing activity has re-entered an expansionary phase after contracting in June. However, because the PMI is a short-term indicator, a one-month achievement is not enough to conclude that the industry has entered a strong recovery trend,” Saleh said in a written statement on Monday.

He added that consistent expansion over several months, supported by other indicators such as industrial output, capacity utilisation rates, and investment, is needed to confirm a sustainable recovery. Saleh also noted that while Indonesia’s position compared to other ASEAN countries shows improvement, the pace of national manufacturing expansion remains relatively moderate compared to some regional peers recording higher growth.

On the other hand, the industrial sector still faces various challenges, including rising raw material prices, weak export demand, and a cautious attitude among business actors regarding raw material purchases. “This shows that the recovery is not yet evenly distributed and still requires strengthening from the demand side,” he said.