Flooring Guide by Cinvex — JAKARTA: Bank Indonesia (BI) projects that the manufacturing industry will remain in an expansionary phase throughout the second quarter of 2026, despite recent data from S&P Global showing that Indonesia’s manufacturing Purchasing Managers’ Index (PMI) contracted in April 2026.
According to the BI Prompt Manufacturing Index (PMI-BI) report for the first quarter of 2026, the central bank expects the performance of the manufacturing industry to rise to 52.26% in the second quarter. This projected growth is primarily fueled by increases in production volume, finished goods inventory, and total order volumes.
The central bank noted that the majority of sub-sectors are anticipated to remain in the expansion phase. Specifically, the furniture, leather goods, footwear, and food and beverage industries are expected to lead with the highest index ratings, according to the report released on Monday, June 1, 2026.
Related: Manufacturing Sector Remains Vulnerable to Layoffs
In the first quarter of this year, BI recorded a manufacturing performance of 52.03%, showing an improvement over the 51.86% recorded in the preceding quarter. A breakdown of the components reveals expansion in finished goods inventory (54.07%), production volume (54.07%), and total order volume (53.20%).
Related: Indonesia’s Manufacturing PMI Drops to 49.1 in April 2026, Here is Why
However, two specific components remained in the contraction zone, falling below the 50% threshold: the speed of input delivery (49.06%) and total employment figures (48.76%). Most sub-sectors are seeing growth, with industries such as paper and paper goods, printing, leather and footwear, and food and beverages consistently driving the sector’s expansion.
Related: Manufacturing PMI Projected to Remain Expansive, Supported by Purchasing Power
These findings contrast with S&P Global data, which indicated that Indonesia’s Manufacturing PMI fell back into the contraction zone in April 2026. The index declined from 50.1 in March to 49.1 in April, marking the first time the sector has contracted in nine months. In the context of the PMI, any reading below 50.0 indicates a decline in manufacturing operating conditions.
Usamah Bhatti, an economist at S&P Global Market Intelligence, stated on May 4, 2026, that the manufacturing sector is beginning to feel the impact of intensifying inflationary pressures stemming from the conflict in the Middle East. This downturn was largely triggered by a softening in production activity. Output volume has now contracted for two consecutive months, with the rate of decline accelerating to its deepest level in nearly a year.
Bhatti added that business owners have attributed this unfavorable climate to a combination of surging raw material costs, supply chain disruptions, and weakening consumer purchasing power.
Summary
Bank Indonesia projects that the manufacturing sector will continue to expand in the second quarter of 2026, with the Prompt Manufacturing Index expected to reach 52.26%. This growth is primarily driven by increases in production volume, finished goods inventory, and total order volumes, particularly within the furniture, food, and beverage sub-sectors. These positive projections contrast with recent S&P Global data, which reported a contraction in April 2026 due to the first decline in activity in nine months.
The recent economic downturn cited by S&P Global is attributed to inflationary pressures, rising raw material costs, and supply chain disruptions linked to geopolitical conflicts. Furthermore, Bank Indonesia’s data highlights that employment figures and input delivery speeds remain in a contraction zone despite the overall sectoral growth. Business leaders continue to express concerns regarding weakened consumer purchasing power and the ongoing impact of these unfavorable market conditions.