RRI.CO.ID, Jakarta - The Indonesian manufacturing sector showed signs of strengthening in May 2026, with business confidence rising despite global economic pressures and fluctuations in the rupiah exchange rate.

The Ministry of Industry recorded the Industrial Confidence Index (ICI) at 53.56 in May, up from 51.75 in April, indicating that the manufacturing sector remains in an expansion phase.

“This significant rise in the ICI reflects the optimism of industry players regarding President Prabowo’s decision not to raise subsidized fuel prices,” said Ministry spokesperson Febri Hendri Antoni Arif in Jakarta on Tuesday, May 26, as quoted by Antara. The policy is considered effective in keeping inflation stable and supporting public purchasing power.

Febri noted that all components of the ICI in May were in the expansion zone. The production variable posted the largest increase, rising 3.86 points to 55.20, the highest level since January 2025.

The orders variable climbed to 53.47, while inventories reached 51.33. Of the 23 manufacturing subsectors analyzed, 20 recorded expansion, contributing 97.8 percent to the non-oil and gas manufacturing GDP in the first quarter of 2026 (Q1-2026).

The strongest performance came from the ready-to-wear apparel and paper industries. Optimism was evident in both export-oriented and domestic market industries. The ICI for export-based industries stood at 53.73, up 1.45 points from April, while industries targeting the domestic market saw a sharper increase of 2.56 points to 53.46.

The growth in the ICI aligns with the non-oil and gas manufacturing sector, which expanded 5.14 percent year-on-year in Q1 2026. During the same period, manufacturing remained the primary contributor to national exports, accounting for USD 54.98 billion, or 82.25 percent of Indonesia’s total exports.

The Ministry’s Director General of Small, Medium, and Miscellaneous Industries (IKMA), Reni Yanita, added that the IKMA sector continues to expand, supported by household consumption, the domestic market, and growth in the retail sector. ***