Manufacturing rises, hiring lags
Indonesia’s manufacturing sector hit its strongest reading in about two-and-a-half years with Bank Indonesia’s PMI at 52.03 for Q1. (tempo.co) Employment inside manufacturing, however, remained in contraction even as production, inventories and new orders improved. (ekonomi.bisnis.com) That labour weakness was reported alongside BIS/industry commentary noting firms are expanding output without adding staff. (aktual.com)
Indonesia’s factories grew faster at the start of 2026, but manufacturers still cut jobs. (bisnis.com) Bank Indonesia said its Prompt Manufacturing Index reached 52.03 in the first quarter of 2026, up from 51.86 in the fourth quarter of 2025 and the highest reading in about two-and-a-half years. In this survey, a reading above 50 signals expansion from the previous quarter. (tempo.co) The gain came from bigger finished-goods inventories, higher production volumes and stronger total orders, all of which stayed in expansion territory. The employment component, however, remained below 50 at 48.76, showing factories were still reducing labor use even as output rose. (aktual.com) That split has shown up in other business surveys this month. S&P Global’s monthly Indonesia Manufacturing Purchasing Managers’ Index slowed to 50.1 in March from 53.8 in February, with production falling again and firms citing raw-material shortages, higher prices and turbulence tied partly to the war in the Middle East. (pmi.spglobal.com) Bank Indonesia’s separate quarterly business activity survey also showed companies feeling more pressure in the first three months of 2026, even as overall activity stayed positive. The central bank said respondents still expected business activity to improve in the second quarter, with a weighted net balance of 14.80%. (bi.go.id) Business groups said the hiring weakness reflects a broader squeeze on manufacturers rather than a collapse in demand alone. The Indonesian Employers Association, known as Apindo, said many companies are trying to raise output first through efficiency and existing capacity instead of adding workers. (bisnis.com) That pattern has been building for months. Bank Indonesia’s quarterly manufacturing releases and Bisnis.com’s earlier reporting showed factory activity stayed in expansion in late 2025 and early 2026 while the labor component remained in contraction. (bisnis.com) For now, Indonesia’s factory story is two tracks at once: production is still growing, but payrolls are not following. The next quarterly Bank Indonesia survey will show whether stronger orders finally turn into hiring or whether manufacturers keep expanding with the same headcount. (bi.go.id)
