Vietnam’s manufacturing sees decline in output amid COVID-19 outbreak

The Vietnam Manufacturing Purchasing Managers' Index (PMI) ticked up to 45.1 in July from 44.1 in June, signalling a marked deterioration in business conditions across the sector for the second month in a row.

Vietnam’s manufacturing sees decline in output amid COVID-19 outbreak hinh anh 1

The current wave of the COVID-19 pandemic in Vietnam leads to further disruption across the manufacturing sector during July (Photo: VNA)

The Vietnam Manufacturing Purchasing Managers' Index (PMI) ticked up to 45.1 in July from 44.1 in June, signalling a marked deterioration in business conditions across the sector for the second month in a row.

The latest survey from Nikkei and IHS Markit revealed on August 2 that the current wave of the COVID-19 pandemic in Vietnam has led to disruptions across the manufacturing sector during July. Rates of decline in output and new orders increased from the previous month and employment was down sharply amid reports of temporary company closures and social distancing restrictions.

Meanwhile, disruption was also felt in supply chains, with delivery times lengthening to the greatest extent in more than ten years of data collection. The rate of input cost inflation accelerated sharply, but efforts to secure orders meant that firms raised their selling prices at a relatively modest pace.

“Anecdotal evidence from manufacturers highlighted the impact that the latest COVID-19 outbreak has had on operations. Some firms have been forced to close temporarily, while others are having to operate with reduced capacity due to social distancing measures,” the survey stated.

These effects, alongside a marked drop in new orders, resulted in a further sharp reduction in manufacturing production at the start of the third quarter. The decline in output was softer only than those seen following the initial outbreak of the COVID-19 pandemic in March and April last year.

According to the survey, alongside lower total new orders, new business from abroad was also down. That said, the reduction in exports was softer than that seen for total new business amid some reports of improving demand in international markets.

Reduced workloads, temporary closures and limits on staff numbers due to social distancing requirements meant that employment decreased markedly for the second month running. While disruption to operations led to backlogs of work to build up at some firms, this was outweighed by a sharp drop in new orders. Overall, outstanding business decreased moderately.

Severe disruption to supply chains was noted in July, with the extent of delivery delays the most marked since the survey began more than a decade ago. Panellists linked longer lead times to difficulties with transportation both domestically and internationally due to the pandemic, as well as raw material shortages.

Manufacturers were also faced with surging input costs. The rate of input price inflation accelerated the fastest since April 2011. Higher costs for raw materials such as iron and steel, products imported from China and freight charges were all reported by respondents.

While some firms passed on these higher cost burdens to clients, others were reluctant to do so given a weak demand environment. As a result, the rate of output price inflation was much softer than that seen for input costs, suggesting pressure on profit margins.

Concerns around the ongoing impact of the pandemic meant that business confidence remained below the series average in July, although firms remained optimistic overall of output growth over the coming year.

Commenting on the latest survey results, Andrew Harker, Economics Director at IHS Markit, said: “The current wave of the COVID-19 pandemic is having a severe impact on Vietnamese manufacturers, according to the latest PMI data, with company closures and social distancing contributing to a steep drop in production. Rules are also limiting how many staff members can be on site at any time, further disrupting production lines.

"Added to issues with new orders and production, firms are also facing severe supply-chain disruption. Supplier lead times lengthened to an even greater extent than after the initial outbreak of the pandemic last year when price pressures surged.”

"The sector is likely to remain under pressure and struggle to generate growth until the outbreak can be brought under control, so it will be important to keep watching the COVID-19 case numbers for signs of improvement," Andrew said.

IIP up nearly 8 percent

The General Statistics Office (GSO) reported Vietnam’s index of industrial production (IIP) rose by 7.9 percent year-on-year in July.

The rise was much higher than the 2.6 percent growth rate of the same period in 2020, but lower than the 9.4 percent rate of the same period in 2019.

Manufacturing recorded the largest gain in the first seven months of this year at 9.9 percent, against the 4.2 percent increase of the same period in 2020. The rise contributed 8.1 percentage points to the whole industry’s growth.

It was followed by an increase of 8.2 percent in power generation and distribution.

Water supply and waste treatment climbed 5.6 percent while mining and quarrying declined by 6.3 percent./.

Source: VNA
en.vietnamplus.vn

Related News

Rubber exports grows sharply in June

Rubber exports grows sharply in June

VCN - According to Import – Export Tax Department (Ministry of Industry and Trade), Vietnam's rubber exports in June 2024 reached about 150 thousand tons, worth 238 million USD, up 77.6% in volume and 76.6% in value. Price compared to May 2024.
Vietnam rises 11 places in budget transparency ranking

Vietnam rises 11 places in budget transparency ranking

VCN - The results of the Open Budget Survey 2023 (OBS 2023) have just been announced by the International Budget Cooperation (IBP), Vietnam's budget transparency ranking continues to be raised to 57 out of 125 countries, climbing 11 places compared to the 2021 assessment period and rising 20 places compared to 2019.
South Korea is Vietnam’s leading trading partner

South Korea is Vietnam’s leading trading partner

VCN – South Korea has maintained its position as largest trading partners of Vietnam for many years.
Vietnam hopes to have a breakthrough in investment from Japanese ODA capital

Vietnam hopes to have a breakthrough in investment from Japanese ODA capital

VCN - On June 26, Minister Ho Duc Phoc had a meeting with Mr. Ito Naoki, Ambassador Extraordinary and Plenipotentiary of Japan to Vietnam. Speaking at the reception, the Minister said that Vietnam wanted to have a breakthrough in the process of investing ODA capital, focusing on large national projects.

Latest News

Cambodia is Việt Nam

Cambodia is Việt Nam's largest source of cashew nuts

Việt Nam imported nearly 1.5 million tonnes of cashew nuts in the first six months of this year, worth US$1.8 billion.
US cancels tax evasion probe into wooden cabinets imported from Vietnam

US cancels tax evasion probe into wooden cabinets imported from Vietnam

The US Department of Commerce (DOC) has ended in its entirety the probe into trade remedy tax evasion on wooden cabinets imported from Vietnam, according to the Trade Remedies Authority of Vietnam (TRAV) under the Ministry of Industry and Trade.
Enterprises lose competitive advantage due to regulations on enhancing micronutrients in food

Enterprises lose competitive advantage due to regulations on enhancing micronutrients in food

VCN - Many enterprises are facing the risk of reduced competitiveness of domestic and export goods due to the lower cost of imported goods, which do not incur the expenses associated with enhancing iodine, iron, and zinc, resulting in Vietnamese goods being outcompeted at home.
If it is "permissive", OCOP products will not be effective for export

If it is "permissive", OCOP products will not be effective for export

VCN - According to experts, if it is "permissive" in recognizing OCOP products, only caring about beautiful designs and packaging without paying attention to quality, transparency of environmental and social issues..., it will not be effective in exporting.

More News

88.8% of import turnover are equipment and raw materials for production

88.8% of import turnover are equipment and raw materials for production

VCN - In the first six months of 2024, import turnover of goods is estimated to reach US $178.45 billion, up 17% over the same period last year. The import structure of goods in the first six months of the year shows a positive signal when up to 88.8% of the total import turnover is the group of goods that need to be imported.
Vietnam

Vietnam's textile industry gains edge with high-value production capabilities

Vietnam has scored higher overall than China and Bangladesh in the United States Fashion Industry Association (USFIA)’s recent survey comparing the competitive advantages of textile-exporting countries to the US.
Trade disputes are rarely brought to international courts

Trade disputes are rarely brought to international courts

VCN - Stating that trade disputes have a significant impact on import-export activities of businesses, talking to the press, Mr. Tran Viet Anh, Vice Chairman of the Ho Chi Minh City Business Association, made many recommendations for businesses.
Banks permitted to sell investment-linked insurance products

Banks permitted to sell investment-linked insurance products

Commercial banks can continue to sell investment-linked insurance products through the bancassurance channel.
Agricultural, forestry and fishery product exports reached US $ 29.2 billion in the first half of the year

Agricultural, forestry and fishery product exports reached US $ 29.2 billion in the first half of the year

VCN - In the first six months of the year, total export turnover of agricultural, forestry and fishery products reached US $29.2 billion, up 19% over the same period in 2023.
Quality varieties spur Vietnamese rice industry

Quality varieties spur Vietnamese rice industry's growth: experts

The success of the rice sector is the fruit of a concerted effort spanning research, production and trade, with high-quality seeds delivered to farmers' hands, former Minister of Agriculture and Rural Development Cao Duc Phat has assessed.
Minister asks for FIATA’s support in dealing with increased shipping freights

Minister asks for FIATA’s support in dealing with increased shipping freights

Minister of Industry and Trade Nguyen Hong Dien has suggested the International Federation of Freight Forwarders Associations (FIATA) provide practical measures to assist Vietnamese businesses in overcoming challenges caused by the increased shipping freight rates, port congestion, and shortage of empty containers.
Efforts made to help firms deeply join global semiconductor supply chain

Efforts made to help firms deeply join global semiconductor supply chain

The Ministry of Planning and Investment (MPI) has taken various solutions to support domestic firms to join the global semiconductor supply chain more intensively, heard a meeting held on July 15 by the ministry.
What do businesses do to cope with foreign trade traps?

What do businesses do to cope with foreign trade traps?

VCN - In commercial disputes that are required to be resolved at the Vietnam International Arbitration Center (VIAC), many Vietnamese businesses are suffering disadvantages due to negligence right from the negotiation and contracting.
Read More

Your care

Latest Most read
Cambodia is Việt Nam

Cambodia is Việt Nam's largest source of cashew nuts

Việt Nam imported nearly 1.5 million tonnes of cashew nuts in the first six months of this year, worth US$1.8 billion.
US cancels tax evasion probe into wooden cabinets imported from Vietnam

US cancels tax evasion probe into wooden cabinets imported from Vietnam

The US Department of Commerce (DOC) has ended in its entirety the probe into trade remedy tax evasion on wooden cabinets imported from Vietnam, according to the Trade Remedies Authority of Vietnam (TRAV) under the Ministry of Industry and Trade.
Enterprises lose competitive advantage due to regulations on enhancing micronutrients in food

Enterprises lose competitive advantage due to regulations on enhancing micronutrients in food

VCN - However, the business community and food industry associations were very surprised and disappointed with the draft amendment to Decree 09 by the Ministry of Health. The draft essentially maintains the problematic provisions of Decree 09, Ms. Ly Kim
If it is "permissive", OCOP products will not be effective for export

If it is "permissive", OCOP products will not be effective for export

VCN - After 5 years of implementing the One Commune One Product Program (OCOP Program), as of June 2024, the whole country has 13,368 OCOP products in 7,000 industries, of which more than 70% are rated 3 stars, about 26% are rated 4 stars and the rest are
88.8% of import turnover are equipment and raw materials for production

88.8% of import turnover are equipment and raw materials for production

VCN - Assessing the situation of importing goods, the Ministry of Industry and Trade said that in June 2024, it is estimated to reach US $30.15 billion, down 7.9% compared to the previous month, compared to the same period last year, the import turnover o
Mobile Version