Jakarta. Indonesia’s manufacturing sector showed further signs of weakness in June as the country’s Purchasing Managers’ Index (PMI) fell deeper into contraction territory.

According to S&P Global, Indonesia’s manufacturing PMI dropped to 46.9 in June 2025, down from 47.4 in May, marking continued contraction for Southeast Asia’s largest economy. A PMI reading below 50 indicates a decline in manufacturing activity.

Industry Ministry spokesperson Febri Hendri Antoni Arief said the lower PMI reflected ongoing uncertainty in the industrial sector, with manufacturers holding back production while waiting for more pro-business policy packages. Weaker demand in export and domestic markets, along with declining household purchasing power, have also dampened output.

“The contraction shows that the industry is still waiting for clear policy support, while facing weaker export orders and softer local demand,” Febri said.

University of Indonesia economist Ninasapti Triaswati warned the persistent decline in the manufacturing PMI indicates that Indonesia’s macroeconomic conditions are under mounting pressure.

“The weakening signal comes from two sides: investment and employment. This means some of our companies are going bankrupt, a dangerous sign for manufacturing, which has high employment absorption,” Nina told Beritasatu.com on Wednesday. “It should prompt the government to re-evaluate what is happening to our labor-intensive sectors.”

Nina added that recent waves of layoffs are partly driven by companies adopting new technologies and automation to maintain productivity, which has come at the cost of jobs.

However, she said that while the manufacturing sector struggles, agriculture is showing resilience and could offer new economic opportunities if leveraged strategically.

“What actually grew strongly in the first quarter of 2025 was the agriculture sector. There’s an opportunity for Indonesia to shift more jobs there, then expand into agribusiness and agro-based manufacturing,” she said. “We also have the maritime, forestry, and plantation sectors, which support food security. This could strengthen food self-sufficiency and feed into the manufacturing base.”