Indonesian Manufacturing Sector Sluggish in September 2025, Despite Growing Demand

S&P Global stated that there were no signs of significant change for two consecutive months in Indonesia's manufacturing business.

This is reflected in Indonesia's Purchasing Managers' Index (PMI) score, which was recorded at 50.4 in September 2025, down from 51.5 points in August 2025.

The index is the result of a survey of managers from hundreds of sample companies. Its survey indicators include growth in production volume, export and domestic orders, workforce size, supply delivery times, and the stock of materials purchased by each company.

The score scale is set at 0-100 points. A score below 50 reflects weakening or contraction; a score of 50 means stable or no change; and a score above 50 indicates strengthening or expansion compared to the previous month.

Analysts noted that companies often attribute increases to rising market demand for goods. Demand conditions appear to be driven by the domestic economy, as international demand has declined twice in the last three months amid a drop in foreign demand.

"Although new orders continued to grow, production declined in September," the analyst team wrote in their statement, quoted on Tuesday (October 7, 2025).

Production output also fell five times in the last six months, though marginally, as companies noted a decline in client purchasing power. Despite the decline in output, improved demand conditions prompted companies to increase input purchases for two consecutive months.

Accordingly, companies increased pre- and post-production inventories to prepare for increased production amid signs of improving demand. However, companies also noted that inputs and finished goods were also purchased and stored to hedge against rising raw material prices.

"From a supply perspective, average delivery times for inputs significantly decreased over two years amid direct deliveries to producers," the analyst team said.

S&P Global observed that companies were quite confident that early signs of growth would continue to develop. This aligns with increased confidence in output over the next 12 months compared to August, and was the highest in four months.

Furthermore, employment rose for two consecutive months to keep pace with demand. Additional capacity also helped companies reduce outstanding work, although the rate of decline remained unchanged from the previous survey.