Indonesia's manufacturing output declines, Middle East war disrupts supply chains

Investing.com – According to the S&P Global Indonesia Manufacturing Purchasing Managers’ Index published on Wednesday, Indonesian manufacturing stalled in March as the war in the Middle East disrupted raw material supply and demand.

The index fell from 53.8 in February to 50.1 in March, indicating that business conditions broadly stalled. Manufacturing output declined for the first time in five months, with the rate of contraction the fastest since June 2025.

New orders fell for the first time in eight months, reversing February’s sharp expansion. New export orders also declined after growing last month.

Manufacturers said shortages of raw material supply and rising material prices put pressure on production and demand, partly due to the war in the Middle East and global economic turmoil.

Input delivery times were extended for the sixth consecutive month, with the degree of delay the worst since October 2021. Survey panelists said material shortages and shipping delays emerged after the outbreak of the war in the Middle East.

Input cost inflation accelerated to the highest level since March 2024. Manufacturers raised output prices at the fastest pace since June 2022 to offset higher costs.

Employment levels fell for the second time in three months, while purchasing activity declined for the first time since July 2025.

Despite the downturn, manufacturers remained optimistic about output for the coming year, even though confidence remained below the series average.

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