Indonesia Manufacturing PMI Ends 2025 in Expansion Mode Despite Slower Momentum

JAKARTA, Investortrust.id — Indonesia’s manufacturing sector extended its expansion in December as the S&P Global Indonesia Manufacturing Purchasing Managers’ Index or PMI remained above the 50 threshold on Thursday, Jan 2, 2026 in Jakarta, signaling improving business conditions despite softer momentum at year end.

The headline PMI eased to 51.2 in December from 53.3 in November, reflecting slower but sustained growth as new orders and production continued to rise while export demand weakened.

Data from S&P Global showed new orders expanded for the fifth consecutive month, driven mainly by domestic demand and new product launches, while new export orders contracted for a fourth straight month.

Manufacturing output also increased for a second month, although growth remained marginal as raw material shortages constrained production capacity toward the end of the year.

Firms responded to improving demand by raising employment and purchasing activity, though job creation was modest and in line with the 2025 average, while backlogs of work rose for a second consecutive month.

Inventory accumulation accelerated as manufacturers increased stocks of both input materials and finished goods to prepare for future demand, with post production inventories rising at the joint fastest pace in six years.

Cost pressures remained elevated, with higher raw material prices, supply shortages, and delivery delays contributing to sharp input cost inflation, although the pace eased to a four month low.

Manufacturers continued to pass higher costs to customers through price increases, with output charge inflation exceeding the 2025 average despite moderating from November.

Looking ahead, business optimism strengthened to a three month high as firms expressed confidence that production would increase in 2026, supported by expectations of stronger demand and expanded product offerings.

“Indonesia’s manufacturing sector marked the end of 2025 with a sustained improvement in operating conditions, extending the current period of growth to five months,” said Usamah Bhatti, Economist at S&P Global Market Intelligence.

“Despite easing on the month, cost inflation remained robust, and firms continued to pass higher costs to clients, while optimism for the year ahead strengthened to the highest level in three months,” he added.