Vietnam’s manufacturing sector experienced third consecutive decline
Technicians at PV Oil perform maintenance at a refinery in the southern province of Ba Ria-Vung Tau. (Photo: VNA)
Vietnam's manufacturing sector continued a declining path in May with economists and industry insiders saying weak demand is a major contributor, according to a report published on June 1 by S&P Global.
They said output and the number of new orders have decreased sharply with companies looking to cut jobs and reduce purchases.
The report said the Southeast Asian economy's Purchasing Managers' Index (PMI) was reported to have fallen to 45.3 in May from 46.7 in April. It marked the third consecutive month of decline and the largest drop since September 2021.
S&P Global said global demand for goods and services has remained weak, resulting in a significant drop in new orders. Revenue from export markets has also suffered for the third consecutive month.
Meanwhile, companies have taken measures to scale down production since the beginning of Q2, 2023, most notably in intermediate goods manufacturing. Weak demand has been hurting business confidence with Vietnam's PMI at its lowest level since November last year.
However, it has given companies time to address some backlog orders from previous months.
Despite companies reducing their operational capacity, they were able to tackle a significant portion of the backlog of work in May. The amount of unfinished work has decreased at the fastest pace since June 2021.
As production decreased, companies have been reducing both purchasing activities and inventory, marking the sharpest decline in inventory level in nearly two years.
Meanwhile, the operational efficiency of sellers has improved for the fifth consecutive time.
Finished goods inventory has also decreased as companies adjust their production operations in line with the decline in new orders. This is the first decrease in three months. Meanwhile, demand for input goods continues to decline, relieving pressure on the supply chain.
The operational efficiency of sellers has improved for the fifth consecutive year with the most significant improvement recorded since February 2015. Decreased purchasing activities also relieved some pressure on the supply chain.
Weaker demand has forced suppliers to reduce prices to boost demand while input costs have decreased for the first time in the last three years. Prices were reported to have gone down for a second consecutive month.
Andrew Harker, economics director at S&P Global Market Intelligence, said the current decline in the number of new orders is a warning sign for the country's manufacturing sector and the sector will likely face an extended period of contraction rather than just a temporary downturn.
He said companies should be on the lookout for economic data for the coming months as they will be crucial to determine if the market is going to recover./.
Related News
Leverage to increase the scale of Vietnam - Laos trade turnover
10:51 | 15/04/2024 Import-Export
Vietnam-China trade reaches over US$ 27 billion
09:29 | 10/04/2024 Import-Export
How more than 6 tons of smuggled gold transported to Vietnam?
07:49 | 05/04/2024 Anti-Smuggling
Destroying a "huge" drug trafficking network from Europe to Vietnam by air
10:10 | 02/04/2024 Anti-Smuggling
Latest News
Vietnam earns 1.43 billion USD from rice exports in Q1
15:50 | 19/04/2024 Import-Export
Localities get ready for fourth FDI boom
15:35 | 19/04/2024 Import-Export
Opportunities to develop a smart and sustainable packaging industry
14:14 | 19/04/2024 Import-Export
Domestic retailers eye export-quality products
17:37 | 18/04/2024 Import-Export
More News
Textile and garment exports recovered positively
10:26 | 18/04/2024 Import-Export
Launch of FDI Annual Report 2023
16:25 | 17/04/2024 Import-Export
Vietnam has opportunities to attract, develop the offshoring market
16:11 | 17/04/2024 Import-Export
Nearly 600 million USD disbursed in support of agroforestry, aquatic sectors
16:09 | 17/04/2024 Import-Export
Be proactive and flexible with production materials
09:02 | 17/04/2024 Import-Export
Cooperate to build leading and "rich in vitality" state-owned enterprises
08:59 | 17/04/2024 Import-Export
Garment & textile sector tries to keep growth momentum
14:16 | 16/04/2024 Import-Export
Businesses capitalize on recovery momentum to explore market expansion
10:01 | 16/04/2024 Import-Export
Access to the Chinese market is increasingly convenient
15:12 | 15/04/2024 Import-Export
Your care
Vietnam earns 1.43 billion USD from rice exports in Q1
15:50 | 19/04/2024 Import-Export
Localities get ready for fourth FDI boom
15:35 | 19/04/2024 Import-Export
Opportunities to develop a smart and sustainable packaging industry
14:14 | 19/04/2024 Import-Export
Domestic retailers eye export-quality products
17:37 | 18/04/2024 Import-Export
Textile and garment exports recovered positively
10:26 | 18/04/2024 Import-Export