Indonesia’s Manufacturing Purchasing Managers’ Index (PMI) returned to expansion in September 2026 after contracting in the previous month. Growth in the manufacturing sector was supported by increases in new orders and production, amid stronger exports. 

According to a survey by S&P Global, Indonesia’s Manufacturing PMI rose to 52.4 in September 2026 from 49.8 in August. A reading above 50 indicates that the manufacturing sector expanded compared with the previous month. 

Trevor Balchin, Economics Director at S&P Global Market Intelligence, said Indonesia’s manufacturing sector ended the third quarter of 2026 with strong performance. Production and new orders increased solidly, supported by higher exports. 

“Supported by increased exports and resulting in the strongest overall monthly performance in the sector since February, just before the outbreak of the conflict in the Middle East,” he said in the document on Thursday (1 October). 

The improvement in September was the strongest since February 2026. All five components of the PMI contributed positively to the index during the month. 

Demand for Indonesian goods strengthened in September. New order volumes increased at the fastest rate since February, reflecting stronger demand and the start of new projects. Growth in new orders was also supported by export markets. New export orders increased for the second consecutive month, recording their strongest rate of growth since May 2022. 

The increase in demand subsequently boosted manufacturing output. Production increased at its fastest pace since February, supported by customer demand, new projects, improved purchasing power, and an expansion in product varieties. 

The increase in workloads prompted manufacturers to add workers in September. This marked the third instance of job creation in the manufacturing sector in 2026. The rate of employment growth was also the fastest since February 2025. 

However, the increase in capacity was not sufficient to keep pace with the rise in workloads. Backlogs of work increased at their fastest rate in five years. Meanwhile, manufacturers reduced their stocks of finished goods at the fastest rate since August 2020. 

Manufacturing cost pressures began to ease in September. Input price inflation slowed to its lowest level in six months, although the increase remained above the survey’s long-term average. 

The easing of cost pressures prompted manufacturers to resume increasing their purchases of inputs. Input purchases rose at the fastest rate since February, while input inventories grew at their strongest pace since March 2024. 

Manufacturing output prices also increased at the slowest rate in six months. 

The outlook for production over the next 12 months remained positive. Expectations of higher production were supported by stronger demand, new projects, business expansion plans, and hopes for greater stability in raw material prices. 

This article is published in partnership with Katadata   

Original article here