Antara News·Indonesia·Friday, October 30, 2026 at 08:52 AM UTC

Indonesia's Industrial Confidence Index rises to 53.77 in October

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Ahmad Muzdaffar, Uyu Liman

Jakarta (ANTARA) - Business confidence in Indonesia's manufacturing sector is expected to remain strong over the next six months, supported by improving factory activity as the country's Industrial Confidence Index (IKI) climbed to 53.77 in October 2026.

"Month after month, the IKI indicates that the industrial sector remains in expansion territory and continues to demonstrate resilience. The vast majority of the 23 surveyed subsectors posted strong performance," Industry Ministry Secretary General Eko S.A. Cahyanto said in a statement released here on Friday.

The October index rose 1.84 points from 51.93 in September 2026 and increased 0.27 points from 53.50 in October 2025. A score above 50 indicates expansion, while a reading below 50 signals contraction.

Cahyanto noted that manufacturers remained optimistic about their business prospects, with 67.4 percent of respondents expressing confidence in the outlook for the next six months.

Meanwhile, the share of pessimistic respondents declined to 5.5 percent from 5.8 percent in the previous survey.

By market orientation, the index for export-oriented manufacturers stood at 53.93, while that for domestic market-oriented producers reached 53.55.

October's improvement was driven mainly by increases in new orders and production output. The new orders sub-index rose 2.68 points month-on-month to 56.08, while the production output sub-index increased 1.60 points to 55.38.

In contrast, the inventory index edged up 0.15 points to 45.60 but remained in contraction territory for the fifth consecutive month, as finished goods were quickly shipped to meet demand.

In terms of business activity, 80.4 percent of manufacturers reported stable or improving operations in October, up from 77.9 percent in September. The share reporting a slowdown declined to 19.5 percent.

Cahyanto attributed the momentum partly to seasonal production increases ahead of year-end holidays and festivities.

The food subsector recorded its highest index level of the year. Merrijantij Punguan Pintaria, the ministry's director for beverage, tobacco, and refreshment industries, said the increase was driven by stronger domestic and export orders, although logistics bottlenecks continued to hamper shipments and warehouse storage.

The paper and paper products industry also returned to expansion after contracting in September, supported by strong demand for packaging materials ahead of Christmas and New Year celebrations.

Four subsectors, however, contracted in October: wood, wood products, and cork; printing and reproduction of recorded media; rubber, rubber products, and plastics; and furniture. The ministry cited weak export orders, disruptions to raw material supplies, higher production costs, and softer global demand as contributing factors.

The tobacco processing industry remained in expansion, although its growth slowed from the previous month, supported by stable new orders. Pintaria said manufacturers routinely adjust their operations in anticipation of government excise tax changes.

Official data showed that exports of processed tobacco products reached Rp1.48 trillion from January to August 2026, up 4.74 percent year-on-year.

However, the tobacco industry continues to face challenges from illegal cigarettes, which accounted for an estimated 13.9 percent of tobacco products in circulation in 2025.

Manufacturers have also raised concerns about proposed regulatory changes, including limits on tar and nicotine levels, restrictions on additives, and larger mandatory graphic health warnings. In response, the ministry is holding talks with the Health Ministry to harmonize packaging rules and promotional restrictions while maintaining the industry's competitiveness.

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