Indonesia Manufacturing PMI Hits 53.3 as Domestic Demand Accelerates

JAKARTA, Investortrust.id — Indonesia's manufacturing sector extends its expansion streak in November as S&P Global's Manufacturing PMI climbs to 53.3, the highest since February, driven by a surge in domestic new orders even as export demand weakens. The reading, based on surveys conducted from 12 to 21 November 2025, signals a solid improvement in operating conditions for a fourth straight month and confirms that local demand has been strong enough to offset external headwinds and mounting price pressures.

S&P Global reported that the November index rose from 51.2 in October and stayed comfortably above the 50.0 threshold that separates expansion from contraction, underlining a firmer recovery in factory activity. The latest survey showed that the upturn was led by a sharper rise in new orders, a return to output growth and increases in employment, backlogs and purchasing activity.

Commenting on the latest survey results, Usamah Bhatti, Economist at S&P Global Market Intelligence, said: "November's survey data indicated a positive month for the health of the Indonesian manufacturing economy. A stronger upturn in new order intakes contributed to a renewed expansion in production levels, with the former rising at the quickest pace since August 2023. The domestic economy was a key driver for demand as 2025 nears its end, as firms recorded a steeper reduction in new export orders."

Central to the improvement was new business, which grew at its fastest pace since August 2023 as companies reported rising customer numbers and stronger domestic demand. At the same time, new export orders fell at the steepest rate in 14 months, pointing to a clear divergence between a resilient home market and softer conditions abroad.

Production, which had been broadly flat in recent months, returned to expansion in November and grew at the quickest rate since February. Manufacturers said higher output enabled them to rebuild inventories of finished goods in anticipation of continued demand, suggesting that firms were positioning for further orders rather than simply running down stocks.

Stronger demand also translated into renewed pressure on capacity, with backlogs of work rising for the first time in eight months. The accumulation of unfinished business was described as solid and the most pronounced in more than four years, prompting firms to add staff for a fourth consecutive month even though the rate of job creation eased slightly compared with October.

"Firms responded to higher workloads by raising purchasing levels and employment, while also recording signs of pressure on capacity with the most pronounced increase in backlogs since September 2021," Bhatti said. "Manufacturing firms also noted that price pressures intensified in the penultimate month of the year. Cost inflation was at the highest for nine months amid rising raw material prices and unfavourable exchange rate fluctuations. Increased costs were partially passed through to clients, with charge inflation reaching a 19-month high."

Purchasing activity increased at a solid pace as factories stepped up orders of inputs to support higher production and rebuild safety stocks. However, the survey pointed to mounting strain on suppliers, with average delivery times lengthening for a second month in a row and delays reaching their worst since October 2021 amid reports of road congestion and poor weather.

On the price front, Indonesian manufacturers faced stronger cost pressures, with input price inflation accelerating to its highest level since February. Respondents linked rising costs mainly to higher raw material prices and unfavourable exchange rate movements that pushed up the cost of imported goods across the supply chain.

In response, producers raised their selling prices at the fastest pace in just over one and a half years as they tried to pass at least part of the cost burden on to customers. S&P Global noted that while firms were still able to lift output and hiring, the combination of stronger demand and higher costs pointed to a more inflationary environment in the closing months of 2025.

Despite the solid headline figure, business confidence about the year ahead softened noticeably compared with October, even though it remained positive overall. Manufacturers expressing optimism cited expectations of continued domestic demand strength and improving purchasing power among customers, but the survey found that sentiment was among the weakest since the series began in 2012.