Indonesia’s manufacturing sector continues to show resilience and optimism, with the Industrial Confidence Index (IKI) climbing to 53.50 in October 2025. This marks a steady expansion, supported by rising new orders and inventory levels across key subsectors. As global and domestic demand stabilize, the data underscores the sector’s role as a pillar of national economic recovery and growth.
Key Facts & Background
- IKI October 2025: 53.50 (expansive zone, above 50)
- Month-on-month increase: +0.48 points from September 2025 (53.02)
- Year-on-year increase: +0.75 points from October 2024 (52.75)
- Subsector performance:
- 22 of 23 subsectors in expansion
- 1 subsector in contraction: Textile Industry (KBLI 13)
- Highest IKI scores:
- Tobacco Processing (KBLI 12)
- Paper and Paper Products (KBLI 17)
- Contribution to GDP: Expanding subsectors represent 98.8% of non-oil and gas manufacturing GDP in Q2 2025
- Key IKI variables:
- New orders: 55.25 (+1.46 points)
- Inventory levels: 56.52 (+0.66 points)
- Production: 48.57 (contracting, -1.28 points)
- Market orientation:
- Export-oriented industries: 54.35 (+0.36 points)
- Domestic-oriented industries: 52.34 (+0.42 points)
Strategic Insights
The October 2025 IKI data reflects a cautiously optimistic outlook for Indonesia’s manufacturing sector. With a score of 53.50, the index remains firmly in expansion territory, signaling sustained business confidence and operational momentum. The broad-based expansion across 22 subsectors—covering nearly the entire non-oil and gas manufacturing GDP—suggests that industrial recovery is not only continuing but deepening.
The rise in new orders and inventory levels indicates improving demand conditions, both domestically and internationally. Export-oriented industries, in particular, are benefiting from favorable trade agreements and global market stabilization, as noted by the Ministry of Industry. Meanwhile, domestic-oriented sectors are showing steady growth, supported by consumer spending and government stimulus.
However, the contraction in the production variable (48.57) highlights a potential bottleneck. While orders and inventories are rising, actual output is lagging—possibly due to supply chain disruptions, labor constraints, or cautious capacity management. This divergence warrants close monitoring, as sustained expansion requires alignment between demand and production capabilities.
The textile industry’s contraction stands out as a structural concern. Despite its historical significance and labor intensity, the sector faces challenges from global competition, input cost volatility, and shifting consumer preferences. Targeted support—such as digital transformation, upskilling, and market diversification—will be critical to revitalize this subsector.