Indonesia's Manufacturing Sector Returns to Growth Amid Challenges
Indonesia's manufacturing sector has shown signs of recovery, with the Purchasing Managers' Index (PMI) rising to 50.0 in May 2026, up from 49.1 in April, according to Standard & Poor's Global Ratings. This marks a return to expansion territory, indicating stabilization in business conditions after a previous contraction. Despite this positive development, manufacturers are facing significant challenges, including rising raw material costs and shortages of production inputs. New orders have increased for the second consecutive month, driven by stronger domestic demand, although export performance has weakened due to ongoing Middle East conflicts and rising global prices. The sector continues to struggle with escalating raw material costs, leading to a contraction in factory output for the third consecutive month. Employment levels have also fallen, albeit marginally, as companies adjust to lower production volumes. Inflationary pressures have intensified, with input cost inflation reaching its highest leve... 
