Indonesia’s manufacturing sector showed renewed strength in November 2025, with the Purchasing Managers’ Index (PMI) climbing to its highest level since February. The surge reflects robust domestic demand and rising production volumes after months of slower growth. Yet, challenges remain as export orders weaken and input costs climb, testing the resilience of the industry.
Key Facts & Background
- PMI Performance:
- November 2025 PMI: 53.3, up from 51.2 in October 2025.
- Highest level since February 2025, indicating strong expansion.
- A PMI above 50 signals growth; below 50 indicates contraction.
- Drivers of Growth:
- New orders surged, marking the fastest pace since August 2023.
- Production volumes expanded for the first time in three months, with the steepest increase since February 2025.
- Export Orders:
- Declined sharply, the steepest fall in 14 months.
- Reflects weaker global demand despite strong domestic consumption.
- Price Pressures:
- Input costs rose at the fastest pace since February 2025.
- Output prices increased at the quickest rate in 19 months, as producers passed on higher costs.
Strategic Insights
The PMI surge underscores the strength of Indonesia’s domestic market, which continues to drive manufacturing expansion even as global demand falters. Rising new orders and production volumes highlight the resilience of local consumption and investment, providing a buffer against external volatility.
The sharp decline in export orders signals ongoing challenges in international trade. Sluggish global demand, geopolitical uncertainties, and supply chain disruptions weigh on Indonesia’s export competitiveness. This trend emphasizes the need for diversification of export markets and greater focus on value-added manufacturing to reduce reliance on external cycles.
Rising input costs, particularly in raw materials, present a challenge for manufacturers. The pass-through to higher output prices risks dampening consumer demand if inflation persists. Effective cost management, supply chain efficiency, and government support in stabilizing commodity prices will be critical to sustaining growth momentum.
The PMI data highlights the importance of strengthening Indonesia’s manufacturing base through industrial upgrading, investment in technology, and workforce development. Policies that encourage innovation, improve logistics, and expand access to capital goods can help manufacturers adapt to both domestic opportunities and global challenges.