Vietnam's manufacturing sector remained in growth territory during November, but overall business conditions improved to a lesser extent than in October, according to the latest report released by S&P Global on December 2.

The country's Manufacturing Purchasing Managers’ Index (PMI) remained above the 50.0 no-change mark in November and signaled a second consecutive monthly improvement in business conditions following the contraction caused by Typhoon Yagi in September. At 50.8, however, the reading was down from 51.2 in October and pointed to only a modest strengthening in the health of the sector.

In line with the picture for overall business conditions, manufacturing output increased for the second month running, but at a slower pace than in October.

Although total new orders increased amid signs of improving demand and the securing of new customers, weakness in international demand undermined overall growth.

While output and new orders continued to rise, albeit at weaker rates, employment decreased for the second month running in November. In some cases, firms lowered staffing levels to help reduce costs.

With workforce numbers down, firms again found it difficult to complete orders on time. As a result, backlogs of work increased for the sixth month running, albeit at the slowest pace since June.

Efforts made by firms to limit costs meant that input prices increased at a slightly slower pace in November, and one that was weaker than the average for 2024 so far. Where input prices did rise, panelists linked this to supply shortages and currency weakness.

Similarly, output prices increased only slightly in November, with the rate of inflation broadly in line with that seen in the previous month.

Manufacturers continued to face lengthening suppliers' delivery times midway through the final quarter of the year. Lead times were extended for the third month in a row, and to a greater degree than was the case in October. Respondents signaled transportation issues and difficulties for suppliers to source raw materials.

At the same time, firms reduced their purchasing activity for the second time in the past three months, following a slight increase in October. The drop in input buying and issues with the delivery of materials meant that stocks of purchases decreased again, and at a marked pace. Stocks of finished goods were also down as inventories were used to help meet order requirements. The solid depletion was the most marked since July.