Indonesia's Manufacturing Sector Shows Strength Amidst Cautionary Outlook

November PMI Reflects Mixed Signals

Indonesia's Manufacturing Purchasing Managers' Index (PMI) rose to 53.3 in November, marking its highest level since February 2025 when it reached 53.06. This fourth consecutive month of growth indicates a positive trend in the manufacturing sector, primarily driven by domestic demand and seasonal factors. However, the growth narrative is tempered by concerning signals, particularly in export orders which experienced their deepest contraction in 14 months.

Domestic Demand vs. Export Challenges

The strengthening manufacturing PMI is largely attributed to robust domestic consumption, particularly during the year-end period. The Industrial Confidence Index (IKI) for November stood at 53.45, higher than the previous year, though the increase remains gradual. Apindo Chairman Shinta W Kamdani emphasized that the current manufacturing strength is heavily reliant on end-of-year consumption cycles and policy stimulus transmission, rather than more robust structural improvements.

Forward-Looking Perspective

While the recent PMI improvements are welcome, industry leaders are cautioning against excessive optimism. The continued contraction in export orders raises concerns about the sector's global competitiveness and external demand. As Indonesia looks toward 2026, maintaining the current growth trajectory will require addressing these underlying challenges while continuing to support domestic demand drivers.