Vietnam’s manufacturing sector is showing signs of stabilization, with a slight increase posted in the Purchasing Managers’ Index (PMI) in July.
According to the S&P Global survey released on August 1, Vietnam’s PMI scored 48.7 in July, up from 46.2 in June, indicating that purchasing activity recorded its fifth successive monthly decline, albeit one that was only modest and the weakest in this sequence.
The S&P Global report states the “Vietnamese manufacturing sector remained in contraction territory but showed some signs of stabilization in the first month of the third quarter,” indicating that slower reductions were seen in output, new orders, and employment while business confidence picked up.
However, inventories of unsold products and unused inputs build up in July due to the subdued business environment while prices continued to fall and supplier lead times shortened.
According to manufacturers, demand was still weak, especially in export markets. New export orders fell much more quickly than total new business, with declines in new orders mostly seen from European customers.
Mr. Andrew Harker, Economics Director at S&P Global Market Intelligence, said the latest PMI figures demonstrate that Vietnam’s manufacturing sector remained under pressure in July, with companies again struggling to secure new business and scaling back output accordingly.
“Despite the latest drop in production, firms were still left with unsold stock, however,” he said. “Meanwhile, there were again falls in prices and a shortening of suppliers’ delivery times amid widespread spare capacity in the sector.”
“On a more positive note, there were signs that demand may be stabilizing as new orders fell at the softest pace in five months. Firms will be hoping that this may feed through to renewed growth of orders in the months ahead.”
Google translate