Vietnam’s Manufacturing Purchasing Managers’ Index (PMI) fell to 47.7 in March from 51.2 in February, according to the S&P global report released on April 3.

The report points out that following signs of improvement in February, Vietnam’s manufacturing sector paused in March. Renewed declines were seen in output, new orders, and employment amid reports of muted customer demand. However, falling demand for inputs eased inflationary pressures while delivery times shortened by the most in over eight years.

At 47.7, the index fell back below the 50.0 no-change mark after a rise to 51.2 in February; the fourth decline in the past five months. Business conditions deteriorated strongly, albeit at a less pronounced level than those seen around the turn of the year.

According to enterprises, the pause in growth seen in March was generally reflective of a relatively subdued demand picture. Both total new business and new export orders fell. The decline in overall new orders was the fourth in the past five months, while new business from abroad dipped for the first time in three months. In turn, backlogs of work decreased at the fastest pace since last November.

“Matching the picture for new orders, manufacturing production also dropped in March following a rise in February,” the report stated. “The reduction was only modest, however. Investment goods production increased, but falls were seen in the consumer and intermediate goods categories.”

“The softening of conditions in March will hopefully be just a blip, however, with firms remaining confident in the year ahead outlook,” said Mr. Andrew Harker, Economics Director at S&P Global Market Intelligence. “A sustained period of strengthening cost inflation was brought to an end as pricing pressure was dented by fragile demand, while the recovery in supply chains continued apace.”