Manufacturing in Indonesia, Southeast Asia's largest economy, is showing clear signs of recovery. Data released by S&P Global on November 2 show that Indonesia's manufacturing Purchasing Managers' Index (PMI) rose to 54.0 in October 2026, the highest since March 2024 and the strongest expansion in 31 months.
Coordinating Minister for Economic Affairs Airlangga Hartarto said the continued rise in manufacturing PMI reflects growing market confidence in the Indonesian economy. Industry Minister Mohammad Salmugi also said it indicates improving conditions in Indonesian industry.
Bank Indonesia data previously showed the manufacturing PMI rose to 52.28 in the third quarter of 2026, up from 51.43 in the second quarter, indicating sustained expansion. This is consistent with the trend in the S&P Global PMI.
Indonesia's Industrial Confidence Index (IKI) rose to 53.77 in October, up 1.84 points from September, showing manufacturing remains in expansion territory.
The October PMI increase was mainly driven by rising domestic and foreign orders.
S&P Global data show new order growth in October was the fastest in five years, while export new orders grew at a record pace since the survey began in April 2011. Improved market confidence and new product launches were key drivers.
Rising orders have also created delivery pressure. Indonesian media report that manufacturers' backlogs of work have increased for four consecutive months, and some firms have begun drawing down finished-goods inventories, though employment growth remains limited.
Meanwhile, rising raw material prices, especially fuels, combined with currency fluctuations, have pushed up production costs, prompting some companies to raise prices.
Minister Salmugi said the government will continue to improve the manufacturing environment, guard against unfair import competition, and secure energy and raw material supplies, adding that manufacturing development should be reflected not only in indicators like PMI but also in output, investment, exports and job growth.
