Indonesia's manufacturing sector hits a near two-year high in February

Investing.com – According to data released by S&P Global on Monday, Indonesia’s manufacturing sector recorded its strongest performance in nearly two years in February, driven by a sharp increase in new orders and accelerated production.

S&P Global Indonesia Manufacturing Purchasing Managers’ Index (PMI) rose from 52.6 in January to 53.8 in February, reaching the highest reading since March 2024. A reading above 50 indicates expansion in manufacturing activity.

New orders increased for the seventh consecutive month, with the fastest growth since November 2025. Panel members reported an increase in customer numbers and improved customer confidence.

Demand expansion was broad-based, with new export business rising for the first time in six months. The growth in new export orders was the largest since May 2022, as companies noted improved international market demand.

Production levels increased at the fastest pace since April 2024. Manufacturers attributed the growth in output to the rise in new orders and indicated additional production was used to build inventories to meet future demand. Post-production inventories increased for the fourth consecutive month.

Employment grew for the sixth time in seven months, with the employment creation rate reaching its highest since November 2025. Higher staffing levels helped manufacturers drive production growth this month.

Purchasing activity among Indonesian goods producers accelerated, with input purchases rising for the seventh consecutive month at the fastest rate in nearly two years.

Pre-production inventories also increased as companies reported stockpiling inputs to meet demand improvements and production needs.

The level of unfinished business remained roughly unchanged from the previous month, as firms were able to limit the accumulation of backlogs.

In terms of prices, input cost inflation remained evident but fell to a six-month low. The rate of input price inflation was below the long-term average.

Panel members attributed rising costs to higher raw material prices. In response, companies raised selling prices only modestly to maintain product competitiveness.

Average delivery times extended for the fifth consecutive month, indicating supplier pressures, with reports of transportation delays and flood impacts.

Looking ahead, confidence in the 12-month outlook declined compared to January, falling below the series average, but the reading still indicates a strong optimism for the coming year.

Businesses expect demand conditions to strengthen and prices to stabilize.

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