Domestic Demand Boosts Indonesia's October Manufacturing PMI

S&P Global on Monday (3/11/2025) released Indonesia's Manufacturing Purchasing Managers Index (PMI) in October 2025 rose to 51.2 from the previous month at 50.4. A reading above 50 indicates expansion, while below 50 indicates the opposite.

Meanwhile, a number of experts said the increase was mainly driven by new order growth which rose at the fastest pace since last March.

Industry Minister Agus Gumiwang Kartasasmita said this PMI expansion showed a positive signal of Indonesia's manufacturing sector at the beginning of the fourth quarter of 2025. This achievement marks the third consecutive month of manufacturing expansion, which shows the stability of national industrial growth momentum amid global economic pressures.

Based on the components that make up the PMI, new orders rose from 51.7 to 52.3. Meanwhile, the employment rate increased from 50.7 to 51.3. According to Agus, this increase reflects the increasing market confidence and production capacity of the national industry.

"We see employment increasing at the fastest pace since May 2025. This is a good signal because industrial activity is again driving job creation," Agus said through a press statement received by SUAR in Jakarta (3/11).

Meanwhile, output or production activity remained stable at 50, indicating that industry players are still maintaining a balance between production capacity and market demand. Some industry players reportedly used existing stocks to fulfill the increase in new orders, resulting in a slight decline in finished goods stocks.

Agus highlighted that Indonesia's manufacturing expansion was driven by domestic demand that remained strong amid challenges from global market dynamics. "Although exports are still slowing down due to weakening demand in major markets such as the United States and Europe, the strength of domestic consumption is the main motor of industrial growth," Agus said.

S&P Global noted that input price inflation reached the highest level in eight months due to rising raw material prices. However, the increase in selling prices by producers is still limited. According to Agus, this shows that industry players maintain the competitiveness of domestic product prices to remain competitive, while at the same time restraining inflation at the consumer level.

In a regional context, the ASEAN manufacturing PMI also increased to 51.6 in October 2025. Indonesia (51.2) remains in the expansion zone alongside Thailand (56.6), Vietnam (54.5), and Myanmar (53.1). Some of the world's major economies, such as China (51.2) and India (57.7) showed limited expansion, signaling stability in global manufacturing activity.

Domestic Demand

S&P Global Market Intelligence Economist Usamah Bhatti said the surge came from domestic demand, while export demand declined for the second consecutive month due to weak global markets.

"The improvement in the condition of Indonesia's manufacturing sector strengthened further at the beginning of the fourth quarter of 2025, providing a positive outlook for the coming months," he said in a statement received by SUAR in Jakarta (3/11).

He added that the increase in sales boosted employment and purchasing activity, although production volumes remained rather flat.

Labor market performance also improved as the number of workers increased for the third consecutive month and in October recorded the fastest pace in five months.

Some manufacturers increased capacity to keep pace with new demand, while others utilized existing stocks to fulfill orders, causing finished goods inventories to decline slightly.

However, production cost pressures increased sharply. The rate of input price inflation reached the highest level in eight months, mainly due to rising raw material prices.

However, many companies chose to raise selling prices in a limited way to maintain competitiveness in the market.

"Purchasing activity also grew moderately for the third consecutive month. Some manufacturers increased raw material inventories in anticipation of higher production needs," he said.

Business input

Meanwhile, Executive Director of the Institute for Development of Economics and Finance (Indef) Esther Sri Astuti said the manufacturing index will improve if the government receives input from the business world, what policies need to be improved to support the sustainability of the business world.

It is the business world that runs manufacturing and needs support from the government in the form of policies.

"To improve the manufacturing index in the future, we need input from the business world, so we collaborate together," he told SUAR in Jakarta (3/11).

Chairman of the Indonesian Exporters Association (GPEI) Benny Soetrisno said the manufacturing index issued by S&P Global can be used as input and reference to encourage better manufacturing performance in the future.

The October 2025 manufacturing index at 51.2 illustrates that the manufacturing industry continues to expand despite the uncertain global economic conditions.

"Business people continue to run businesses and continue to wait for policies from the government to encourage the sustainable business world," he told SUAR in Jakarta (3/11).

Benny said that in addition to government policies, other factors that encourage the growth of the manufacturing industry are operational efficiency, quality human resources and the availability of capital.

IKI is still in expansion zone

Meanwhile, last weekend, the Ministry of Industry (Kemenperin) noted that the Industrial Confidence Index (IKI) for October 2025 was still moving in the expansion zone. The Ministry of Industry survey released that the October 2025 IKI was at the level of 53.50.

The October IKI value increased by 0.48 points compared to September 2025 at 53.02. Meanwhile, the October 2025 IKI showed an increase of 0.75 points compared to the October 2024 IKI, which at that time was at the level of 52.75.

Ministry of Industry Spokesperson Febri Hendri Antoni Arief said that the October 2025 IKI increase was supported by the performance of the domestic and export-oriented manufacturing industry.

"Orders are increasing, but production is still contracting. The industry fulfills orders still using existing stock in the warehouse," Febri said in a release received by SUAR in Jakarta (31/10/2025).

The biggest support

In response, Chairperson of the Indonesian Garment and Textile Association (AGTI) Anne Patricia Sutanto said the textile industry is still the largest industry and supports the Indonesian economy. In addition, the textile industry is a major contributor to Indonesia's non-oil and gas exports with a value of US$ 11.9 billion in 2024.

Entering 2025, market conditions are not conducive, with imported products flooding the country and foreign markets fluctuating.

"The textile industry is not weakening but adapting to market conditions, what we are doing is energy efficiency, digitalization and sustainability," he told SUAR, in Jakarta (31/10/2025).

Apart from being export-oriented, TPT is also an important pillar of the regional economy by absorbing millions of workers, especially in Central Java, West Java, and East Java. Therefore, entrepreneurs assess the importance of balanced government policy support between protecting domestic industries and opening up global markets.

Anne said that by increasing competitiveness in terms of human resources, technology, energy and supply chain, the textile industry is able to survive any threat.

He assessed that the narrative that presents the Indonesian textile industry as unable to compete globally does not fully reflect the reality on the ground. Many national garment companies have actually become major partners for well-known global brands and meet strict international standards.

With the right fiscal and industrial policy support, entrepreneurs are confident that Indonesia's textile sector can become a green growth motor that drives sustainable exports and strengthens Indonesia's position in the supply chain and improves local and global competitiveness.

In line with Anne, Executive Director of the Indonesian Textile Association (API) Danang Girindrawardana said the textile industry is a labor-intensive industry that is part of the national strategic interests for economic growth and job creation as envisioned by President Prabowo.

"The textile industry must be able to pioneer modern technology to increase its capacity, quality, be able to protect the business world and its workforce," he told SUAR in Jakarta (31/10).

The growth of Indonesia's textile industry is increasingly positive, at the end of 2024 until the second quarter of 2025 reached 5.39%, contributed to GDP by 0.98%, involved 3.76 million workers which means 19.18% of the total manufacturing workers. While export capacity increased to US$ 8.07 billion in Jan-Aug 2025.