Indonesia manufacturing PMI falls into contraction, signaling deepening industrial weakness

Economists warn that the latest Purchasing Managers' Index data confirms a prolonged downturn in the sector, raising questions about the pace of necessary structural reforms.

By Handelsavisen Newsroom · Automated 2026-07-05 06:21 UTC · 1 min read

Indonesia’s manufacturing sector has slipped into contraction territory, according to the latest Purchasing Managers' Index (PMI) data.

The decline marks a worsening trend for the industry, which economists argue has been struggling with underlying structural issues for an extended period.

He emphasized that the manufacturing base is not merely facing a temporary cyclical dip but is suffering from long-standing ailments that require immediate attention.

Rachbini, a senior economist at the Institute for Development of Economics and Finance (Indef), characterized the drop as a clear signal of deteriorating conditions.

He emphasized that the manufacturing base is not merely facing a temporary cyclical dip but is suffering from long-standing ailments that require immediate attention.

The contraction in the PMI—a key gauge of business activity—suggests that new orders and production levels are shrinking.

For investors monitoring emerging market growth drivers, this data point adds to concerns about the resilience of Indonesia’s industrial output amid global headwinds.