Indonesia manufacturing sector remains in expansion despite IKI dip

Indonesia's manufacturing sector remains in an expansion phase, according to the Ministry of Industry. The Industrial Confidence Index (IKI) for August 2026 was recorded at 52.30, a slight decrease of 0.80 points from the 53.10 level seen in July 2026.

Despite the slowdown, the sector shows broad strength. Out of 23 monitored subsectors, 22 are currently expanding, contributing 98.6 percent to the non-oil and gas manufacturing GDP. The food and beverage industry and the chemical industry are identified as key drivers of this growth. Specifically, the beverage subsector recorded the highest IKI, while the food subsector saw its highest expansion in over two years.

Only the leather, leather goods, and footwear subsector has experienced contraction for four consecutive months, primarily due to reliance on the domestic market. Officials noted that the ratification of the IEU-CEPA could potentially boost footwear exports to the European Union.

Regarding specific components, the production index rose to 55.10, while new orders decreased slightly to 53.13. Both domestic-oriented and export-oriented industries remain in expansion territory, with indices of 51.13 and 53.09, respectively.