Indonesian Manufacturing PMI Up To 49.2 In July 2025, But Still Contracting

JAKARTA - Activities in the manufacturing sector of Indonesia are still contracting in July 2025.

Data Purchasing Managers' Index (PMI) released by S&P Global today, Friday, August 1, shows Indonesia's manufacturing PMI is in 49.2 in July 2025 or experiencing contraction.

This means that PMI has contracted for four consecutive months.

Previously, PMI contracted 46.7 in April, then 47.4 in May, continuing in June (46.9) and July (49.2).

PMI uses the number 50 as the starting point. If it's above 50, it means that the business world is in an expansive phase.

While below that figure means contraction. S&P in his statement explained that the Indonesian manufacturing sector had worsened again in the early second semester of 2025.

Even so, the rate of contraction slowed down compared to the previous month, due to a lighter drop in output and new orders compared to June.

New export orders have decreased again, while employment and purchasing activities remain in the red zone.

The latest survey for July was conducted between July 10 and 24, so most of the responses were obtained before the announcement of the trade agreement with the United States (US) on July 22.

Meanwhile, growth expectations for the next year weakened in July, with business confidence levels at their lowest since the survey took place in April 2012.

It was also reported that the price of input continued to increase sharply and recorded the fastest increase in the last four months.

As a consequence, the selling price of output charges has been increased at the fastest rate since April.

The main factor behind the decline in PMI July is a sustainable contraction in production levels.

Despite the decline, the decline rate was moderate and became the lightest in the last four months.

Respondents said that the decline in output generally reflected the weakness of new orders.

In fact, the decline in new businesses also slowed down during July 2025.

The producer stated that the market's weaknesses were partially offset by the start of several new projects.

Even so, foreign demand for Indonesian manufacturing goods returned to the contraction zone for the third time in four months, after being stable in June.

"The decline in output and new demand continued in the early third quarter, but has subsided since June. However, at the same time, export demand has decreased again," explained Economist at S&P Global Market Intelligence Usamah Bhatti as quoted on Friday, August 1.

He added that producers noted that price pressures had increased since the beginning of the first semester of 2025.

Inflasi biaya mencapai titik tertinggi dalam empat bulan akibat kenaikan harga bahan baku dan fluktuasi nilai tukar yang tidak menguntungkan.

Biaya meningkat sebagian diteruskan ke klien, meskipun inflasi harga jual hanya moderat.

"Kepercayaan diri menghadapi tahun mendatang berkurang tajam pada Juli, dengan tingkat optimistis berada di tingkat terendah dalam survei. Perusahaan menyatakan kekhawatiran tentang tarif AS dan penurunan daya beli yang mungkin membatasi volume produksi pada tahun mendatang," pungkasnya.

Cost inflation reached its highest point in four months due to rising raw material prices and unfavorable exchange rate fluctuations.

The cost of increasing is partially forwarded to clients, even though the selling price inflation is only moderate.

"The confidence in facing next year will decrease sharply in July, with the optimistic level at its lowest level in the survey. The company expressed concerns about US tariffs and a decrease in purchasing power that may limit production volume in the coming year," he concluded.