Key insights
- Indonesia's manufacturing sector stagnated in May with its PMI at 50.0, driven by record cost pressures from raw materials and supply shortages. While new domestic orders improved, export sales declined sharply due to geopolitical issues and high prices. Manufacturers raised output prices significantly, indicating persistent inflation. The data suggests global supply chain disruptions and inflationary headwinds are impacting key manufacturing hubs, potentially signaling broader economic weakness and impacting global demand for goods.
Investing.com -- Indonesia’s manufacturing sector showed no change in operating conditions during May, as the Purchasing Managers’ Index held at 50.0, up from 49.1 in April, according to data released Tuesday by S&P Global.
Manufacturers recorded the second-steepest rise in operating expenses since the survey began in April 2011, driven by higher raw material prices and supply shortages. Input cost inflation accelerated to its second-highest level in the series history, behind only September 2013.
Production volumes fell for the third consecutive month, though at a slower pace than April. Companies linked the output decline to elevated raw material prices and limited availability of inputs.
New orders increased for the second straight month, with the pace of growth reaching its highest since February. Firms attributed the rise to clients building stock amid ongoing price pressures.
However, demand improvements appeared confined to the domestic market, as export sales declined for the third month running at the sharpest rate since August 2021. Companies cited the war in the Middle East and higher prices as factors weighing on foreign demand.
Manufacturers raised output prices at the fastest pace since October 2013 as they passed higher costs to clients.
Supply chain pressures persisted, with average lead times lengthening for the eighth consecutive month due to delivery delays and shortages linked to the war. Purchasing activity declined during May, while companies reduced pre-production and finished goods inventories.
Employment fell for the third successive month, though the reduction was marginal. Outstanding business increased for the first time since February as raw material shortages limited firms’ ability to complete work.
Manufacturers remained confident about output growth over the coming year, though optimism stayed below the series average. Data were collected from 12-21 May 2026.
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