US Markets
Indonesia's Manufacturing Activity Shrinks in April
Indonesia's factory activity contracted in April as the Middle East conflict brought pressure on prices and supply, bringing cost inflation to its highest in four years.S&P Global Indonesia Manufacturing Purchasing Managers' Index or PMI dropped to 49.1 from 50.1 in March, according to a press release from the think tank on Monday.The decline in production volumes during the month was the fastest since May 2025. Firms attributed the diminishment of output to increasing raw material prices, supply shortages and a slowdown in customer demand, despite manufacturers reporting a slight uptick in new order intakes.The slowdown in output reflected the impact of the Iran war in various goods, especially in oil and crude. Indonesia's inflation growth weakened to 2.42% in April, according to data from the Central Statistics Agency."Indonesia's manufacturing sector saw intensifying inflationary pressures start to bite in the midst of the war in the Middle East," S&P Global Market Intelligence economist Usamah Bhatti said. "Firms recorded a solid contraction in output in April, with anecdotal evidence largely pointing to the impact of higher raw material prices and supply shortages on production."Indonesia was among the countries that felt the impact of the oil price shock brought by the war in Iran. State-owned oil and gas enterprise Pertamina raised the prices of non-subsidized fuel products in April, such as those from Pertamax Turbo, Dexlite, and Pertamina Dex.As of Monday, the price of Pertamina Dex's oil in Jakarta is 27,900 Indonesian rupiah per liter, while Dexlite's oil price is 26,000 rupiah per liter. Pertamax Turbo's price on gasoline for the city is at 19,900 rupiah per liter, according to Pertamina's webpage.Meanwhile, manufacturers reduced employment at the start of the second quarter to meet production requirements, S&P Global said.Businesses also remained optimistic that production volumes would rise in the next 12 months."A positive sign was a slight uptick in new orders. However, survey evidence suggested that this was often due to clients making advanced purchases ahead of further potential disruption from the conflict," Bhatti said. "Moreover, optimism eased to a five-month low amid uncertainty regarding the length of the war."
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