Factory activity weakened for a second consecutive month in June, reflecting softer domestic demand and growing uncertainty in global trade despite resilient long-term investment.
Indonesia’s manufacturing sector remained under pressure in June 2026, with the S&P Global Indonesia Manufacturing Purchasing Managers’ Index (PMI) falling to 46.9, down from 47.4 in May. The reading marks the second straight month below the 50-point threshold, indicating that manufacturing activity continued to contract as new orders, production, and purchasing weakened.
The latest PMI suggests that manufacturers are becoming more cautious amid slowing demand and an uncertain global business environment. According to S&P Global, firms reported weaker customer demand, prompting many producers to scale back output and reduce purchases of raw materials. Some companies also delayed hiring, reflecting lower confidence in near-term market conditions.
Key Facts
- Indonesia Manufacturing PMI (June 2026): 46.9
- Previous month (May 2026): 47.4
- Expansion threshold: 50.0
- Trend: Second consecutive month of contraction
The decline comes as Indonesia faces headwinds from weaker global trade, volatile commodity prices, and slower industrial demand in several key export markets. Manufacturers also continue to navigate higher operating costs and cautious consumer spending, factors that have weighed on production decisions despite relatively stable inflation and supportive government policies.
While the PMI points to short-term weakness, it does not necessarily signal a prolonged downturn. Indonesia continues to attract significant investment in downstream industries, electric vehicles, battery manufacturing, and data centers, suggesting that longer-term industrial fundamentals remain intact. These investments could provide fresh momentum once domestic and external demand improves.
The latest data reinforce the importance of stimulating industrial activity through fiscal incentives, infrastructure development, and improved investment certainty. Maintaining competitive energy prices, strengthening supply chains, and expanding export markets could also help manufacturers weather the current slowdown. The June PMI serves as an early indicator that manufacturing is entering a softer phase rather than a period of broad-based expansion. If contraction persists over the coming months, it could weigh on industrial earnings and economic growth.