Vietnam's Manufacturing PMI stays above 50 for 16th straight month

According to a report by S&P Global, the PMI remained above the 50-point threshold for the 16th consecutive month. However, growth in new orders and output slowed, while manufacturers continued to face cost pressures and supply constraints.

The report outlined that the extent of the overall improvement in operating conditions was limited, however, by softer rises in output and new orders. Total new business was up for the sixth month running despite an ongoing drag from falling new export orders. The rate of expansion was solid, but the slowest in the current growth sequence.

With new orders increasing amid stronger customer demand, manufacturing production expanded again in October.

Nonetheless, here too the pace of growth eased and was at a six-month low. Some respondents indicated that difficulties obtaining raw materials had limited production growth.

However, growth also slowed to its lowest level in six months, with some respondents reporting that difficulties in securing raw materials had constrained production.

Transportation difficulties were evident in data on suppliers' delivery times, which lengthened markedly and to the largest extent since April. Rising fuel prices and poor weather conditions were among the factors leading to transportation delays, according to respondents.

Difficulties importing goods and the use of inputs to support production meant that stocks of purchases decreased solidly, despite sustained growth of input buying as companies made efforts to secure goods in order to support production.

Rising transportation costs were also central to the latest rise in input prices as higher costs for oil pushed up fuel prices. The rate of inflation quickened for the second month running and was the fastest since June, albeit still well below the spike seen following the outbreak of war in the Middle East. In turn, output prices also increased at a sharper pace, following only a slight rise in September.

Employment decreased for the third consecutive month in October, falling slightly amid some reports of staff resignations. Despite the drop in workforce numbers, softer new order growth and more efficient processing of outstanding business meant that firms were able to deplete backlogs of work modestly.

Stocks of finished goods also fell as firms used the sale of warehoused goods to draw down inventories. Post-production stocks decreased markedly, albeit to a slightly lesser degree than was the case in September.

Hopes for better raw material availability and further improvements in market conditions supported optimism in the 12-month outlook for production. Sentiment hit an eight-month high but was still weaker than prior to the war in the Middle East.

Andrew Harker, Economics Director at S&P Global Market Intelligence said "Vietnamese firms are battling to maintain growth at present amid headwinds that are making their operations more challenging. New orders continued to rise in October, feeding through to a solid increase in production, but in both cases rates of expansion slowed from September”.

 "The limits to growth were often due to the international environment. Fuel and transportation costs rose amid higher oil prices, while companies reported difficulties importing and exporting products. "While firms are able to maintain improvements for now, they will be hoping for a more conducive environment to growth in the months ahead”, he noted.

Vietnam's manufacturing recovery gains momentum as July PMI rises to 52.9

VOV.VN - Vietnam's Manufacturing Purchasing Managers' Index (PMI) rose to 52.9 in July from 51.8 in June, signalling a further improvement in business conditions, according to an S&P Global report released on August 3.