Indonesia's Manufacturing Sector Is Strengthening, With The Manufacturing Purchasing Managers' Index (PMI) Reaching Its Highest Level Since May 2024

Indonesia's manufacturing sector is off to a strong start in 2025, marked by increased output, new demand, and significant workforce expansion over the past two and a half years. According to an S&P Global report, the Purchasing Manager's Index (PMI) for Indonesian manufacturing reached 51.9 in January 2025, up from 51.2 the previous month and the highest level since May 2024. A PMI above 50 indicates growth in the manufacturing sector.

"The Indonesian manufacturing sector saw rapid expansion in January, supported by a simultaneous rise in output," said Paul Smith, Economics Director at S&P Global Market Intelligence, in an official statement on Monday (February 3, 2025).

Production growth has continued for three consecutive months, driven by an increase in new demand from both domestic and export markets. Companies reported a rise in new exports for two months in a row, reflecting improved global market demand. To prepare for this increased demand, manufacturing firms have added workers over the past two months, achieving the highest recruitment rate in two and a half years.

Additionally, purchasing activity and inventory levels have risen, indicating industry confidence in future business prospects. Despite this growth in the manufacturing sector, inflationary pressures remain a key concern. Input costs have risen due to higher raw material prices, although inflation is still below the trend level.

Tag: Indonesian Manufacturing Sector Paul Smith PMI