Indonesia’s Manufacturing Sector Contracts Sharply in April: PMI Drops to 46.7
Indonesia’s manufacturing industry stumbled in April, sliding into contraction territory for the first time in five months. S&P Global reported on May 2, 2025, that Indonesia’s Purchasing Managers’ Index (PMI) dropped to 46.7—well below March’s 52.4.
A PMI reading under 50 signals contraction, and April’s figures marked the sharpest downturn in at least five years. Manufacturers have started cutting back on inventories, opting to draw down existing stocks rather than replenish supplies.
S&P Global’s report also highlighted how the strengthening US dollar has inflated import costs, prompting businesses to raise prices in an effort to protect margins. Production declined at its fastest pace since August 2021 as both domestic and international demand weakened. Export demand alone slipped twice in the past three months.
In response to falling output, companies trimmed their workforce, albeit modestly—the first such reduction in five months.
Usamah Bhatti, Economist at S&P Global Market Intelligence, noted that Indonesia has entered the second quarter on a challenging footing. “PMI posted its sharpest fall since August 2021, driven by notable drops in sales and production,” he said.
In the near term, Bhatti added, business sentiment remains muted, as firms maintain current capacity rather than plan expansions in the coming months. However, the longer-term outlook remains cautiously optimistic. Businesses still anticipate production growth later this year, banking on eventual improvements in economic conditions and consumer spending—though the timeline for recovery is becoming less certain.
