Business · World News Bureau

Southeast Asia's factory surge: Jakarta and Bangkok lead

Indonesia's factory PMI hit 54.0 in October, its best since March 2024, and Thailand reached 54.8, while Korea, Taiwan, Japan and China all cooled. The south leads, but oil decides how long.

LSN World News · 3 November 2026

Southeast Asia's factory surge: Jakarta and Bangkok lead

<p><em>Special Reporting from LSN News, adapted from today's Asia Money Map episode. <a href="https://youtu.be/1zCCJ9CBHrI" target="_blank" rel="noopener">Watch the video on YouTube.</a></em></p>

<p>Indonesia's factories posted a purchasing managers' index (PMI) reading of 54.0 for October, their strongest since March 2024. Thailand did even better, at 54.8. Days earlier, China's official factory gauge slipped to 49.3. Southeast Asia is pulling ahead of North Asia, though the surge already shows its limits.</p>

<p>PMIs are monthly surveys of factory purchasing managers. A reading above 50 means conditions are improving; below 50, they are getting worse.</p>

<h2>The south surges</h2>

<p>S&P Global says Indonesia's index rose from 52.4 in September to 54.0 in October. New orders rose at the fastest pace since October 2021, and new export orders grew at the steepest rate since the survey began in April 2011. Economic affairs minister Airlangga Hartarto called it "a robust level of growth."</p>

<p>Thailand's index rose to 54.8 from 54.3, its highest since the end of 2025, and S&P Global says new orders rose at one of the strongest paces on record. Malaysia moved back into growth, at 51.0 from 49.9, its strongest improvement since April. Vietnam edged up to 52.3, a sixteenth straight month of improvement. In Singapore the local index eased to 51.4, but DBS notes that electronics new export orders hit their highest level since May 2018.</p>

<p>North Asia cooled. South Korea's index fell to 51.3 from 53.9, its weakest improvement since February. Taiwan eased to 54.9, down from a more than five-year high in September. Japan's slipped to a seven-month low of 53.3. China's official index fell to 49.3, its third contraction in four months, while the private RatingDog survey held at 52.0.</p>

<h2>Why the south is pulling ahead</h2>

<p>The first answer is demand at home. Thai firms credited growing customer bases and business promotion, and Indonesian panel members linked the rise to improved customer confidence and new product launches. This is not only an export assembly line riding one global cycle.</p>

<p>The second answer is supply. Indonesian manufacturers said delivery times shortened for the first time in just over a year, and by the most since December 2019, as shipping improved.</p>

<h2>Four limits already in view</h2>

<p>The first is oil. On Monday, Brent crude fell 7.6% to settle at about $105 a barrel as Washington and Tehran signalled they are open to diplomacy. That is relief, but it is still a war price. Goldman Sachs has raised its December Brent forecast to $105, from $90. In Vietnam, S&P Global says higher costs for oil, fuel and transport drove the fastest rise in input prices since June, while new export orders kept falling. Andrew Harker of S&P Global said the limits to growth "were often due to the international environment."</p>

<p>The second is jobs. Indonesian factories are busy, but job creation was only marginal. Usamah Bhatti of S&P Global said a key area to watch "will be the labour market." In Thailand, workforce capacity fell, often because of staff resignations, and backlogs piled up.</p>

<p>The third is prices. Indonesian firms saw input costs rise faster and raised their own charges at a quicker pace. Thai firms, by contrast, kept selling prices broadly stable. Our read: if oil stays high, that restraint will not last.</p>

<p>The fourth is the AI cycle. Singapore's electronics orders show demand for AI hardware is still strong, but OCBC chief economist Selena Ling warned that growth rates are likely to normalise into 2027.</p>

<p>What to watch: Australia's central bank announces its rate decision on Tuesday, with a hike widely expected, and this week's US jobs data will test Asian currencies already squeezed by expensive oil.</p>

<h2>Our verdict</h2>

<p>Southeast Asia just had one of its best factory months in years, and this time it is not only riding chips. Jakarta and Bangkok are being pulled by orders at home and abroad, while North Asia cools from a high base. But this is a boom with thin hiring, rising costs and an oil price set by a war. If Hormuz reopens, the south keeps its lead. If it does not, the fuel bill decides who keeps growing.</p>

<h2>Sources</h2>

<ul>

<li><a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/ab22d33d10704d1eba287a206c3f7964" target="_blank" rel="noopener">S&P Global Indonesia Manufacturing PMI (2 Nov 2026)</a></li>

<li><a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/a4301329213245b6a866606935498ea5" target="_blank" rel="noopener">S&P Global Thailand Manufacturing PMI (2 Nov 2026)</a></li>

<li><a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/a3655cfd44ed4c85ba84c1d1453a9f23" target="_blank" rel="noopener">S&P Global Vietnam Manufacturing PMI (2 Nov 2026)</a></li>

<li><a href="https://en.antaranews.com/news/439627/indonesias-october-manufacturing-pmi-hits-54-on-strong-trade-surplus" target="_blank" rel="noopener">ANTARA</a></li>

<li><a href="https://www.businesstimes.com.sg/singapore/economy-policy/singapore-factory-growth-slows-october-manufacturing-pmi-dips-51-4" target="_blank" rel="noopener">The Business Times</a></li>

<li><a href="https://investinglive.com/news/investinglive-asia-pacific-market-news-oil-eases-on-doha-talks/" target="_blank" rel="noopener">investingLive</a></li>

<li><a href="https://www.mufgresearch.com/fx/asia-fx-talk-2-november-2026/" target="_blank" rel="noopener">MUFG Research</a></li>

</ul>