The Vietnam Manufacturing Purchasing Managers’ Index (PMI) from S&P Global increased to 47.4 in January from 46.4 in December but still points to a solid monthly deterioration in the health of the manufacturing sector.

The country’s manufacturing sector continued to face challenging business conditions in the opening month of 2023, with production and new orders still heading downwards. There were some signs of improvement in demand, however, as new business fell at a softer pace, helped by a renewed expansion in new export orders.

Employment also decreased at a slower pace and the rate of input cost inflation continued to accelerate, reaching a six-month high. In turn, enterprises increased their selling prices for the first time in three months.

January data signaled a further marked decline in manufacturing production, although it was slightly softer than in December. Lower new orders were often behind falling output, with some firms indicating that customers had sufficient stock holdings and so didn’t need to purchase at present.

The Vietnam Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP.

Indices range between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month and below 50 an overall decrease.