Indonesia’s PMI Falls to 46.9 on Weak Demand

RRI.CO.ID, Jakarta - The Indonesian Industrial Confidence Index (ICI) remained in the expansion zone in June 2026 despite increasingly complex pressures.

The Ministry of Industry recorded an ICI of 52.90, down 0.66 points from May, but still reflecting manufacturers’ optimism about business prospects.

Ministry spokesperson Febri Hendri Antoni Arief said the challenges faced by the industry in June were more complex than in the previous month, stemming from both the production and demand sides.

“Nevertheless, the industrial sector continues to demonstrate strong resilience, ensuring that national manufacturing activity remains in the expansion phase in June,” Febri said in a statement in Jakarta, as quoted on the ministry’s official website on Wednesday, July 1, 2026.

According to Febri, production pressures were triggered by rising prices of imported raw materials due to geopolitical conflicts in the Middle East and the weakening rupiah.

“Power outages in several industries and industrial parks forced some companies to halt production while the disruptions lasted. These conditions certainly affected operational efficiency,” he said.

The rise in industrial gas prices, driven by LNG regasification, also temporarily increased production costs. However, the drop in gas prices from USD 23 to USD 13 per million British thermal units (MMBTU) is viewed as a positive stimulus for industrial competitiveness.

“This policy is expected to enhance the competitiveness of the national industry, particularly for industries covered under the Specific Natural Gas Price (HGBT) scheme. We will continue to monitor its implementation to prevent any reduction or cut in the AGIT (Specific Industrial Gas Allocation),” Febri added.

On the demand side, the ministry is closely monitoring price increases for certain consumer goods and adjustments to non-subsidized fuel prices, which affect household spending on manufactured products.

However, inflation remaining within the government’s target range, along with the policy of maintaining subsidized fuel prices, is seen as capable of preserving public purchasing power.

Amid these pressures, the outlook for manufacturing exports remains positive. Non-oil and gas demand from several export destinations continues to rise, supporting export-oriented industrial production.

“Several manufacturing export destinations are experiencing positive growth, and this has boosted demand and production in export-oriented industries this June,” said Febri.

He added that the combination of a large domestic market, government spending support, and improving export prospects provides a crucial foundation for the manufacturing industry to remain resilient and grow amid global uncertainty.

The ministry also anticipates ongoing risks, including inflationary pressures, rising interest rates, a weakening rupiah, rising energy costs, and the potential impact of El Niño on industrial activity.

“These measures are expected to maintain the momentum of manufacturing growth while strengthening its contribution to national economic growth,” Febri concluded. ***