New Orders Grow, but Indonesia's Manufacturing Sector Slumps by End of 2025

S&P Global released Indonesia's Purchasing Managers Index (PMI) score at 51.2 points in December 2025. This figure is down from 53.3 points recorded in November 2025.

The index is the result of a survey of managers from hundreds of sample companies in the manufacturing industry. The survey indicators include growth in production volume, export and domestic orders, number of employees, delivery times for supplies, and 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.

In its report, S&P Global explained that the expansion of Indonesia's manufacturing sector actually continued, with a value above 50. This was supported by an improvement in new orders.

"This indicates an improvement in manufacturing sector conditions for five consecutive months," S&P Global wrote.

The company also noted continued expansion in production levels, although the pace of growth slowed and was only slight or marginal.

On one hand, solid demand conditions encouraged producers to increase their workforce and purchasing activities to meet additional needs.

From an operational perspective, S&P assessed that there was movement supported by sustained new orders. Growth continued for the fifth month, although its pace slowed compared to November.

According to S&P Global, companies often cited new product launches and an increase in customer numbers as key factors driving sales growth.

"Data shows that this improvement was led by the domestic market, while new export orders declined for the fourth consecutive month," S&P Global stated.

Drivers of Weakening

Despite growth or expansion, it must be acknowledged that manufacturing business conditions weakened at the end of the year.

S&P Global revealed that rising raw material prices, supply shortages, and delivery delays contributed to a significant resurgence in input cost inflation.

"Companies sought to offset this with moderate increases in selling prices," S&P Global said.

An increase in total new orders drove further production growth. This was the second consecutive increase. However, raw material scarcity limited the pace of growth, resulting in only a marginal increase in production.

In line with increasing demand and production needs, producers increased their workforce in December. Unfortunately, the pace of job creation was low, slowing compared to November, but still in line with the average throughout 2025.

"Despite the increase in the number of workers, capacity pressures were still evident due to the growth in new orders. Therefore, companies recorded an increase in backlogs of work for the second consecutive month," S&P Global stated.