The S&P Global Vietnam Manufacturing Purchasing Managers’ Index (PMI) ticked up to 52.3 in October from 51.9 in September, signaling a modest monthly improvement in sector health and marking 16 consecutive months of expansion.
Overall gains were constrained by softer increases in production and new business. Total new orders rose for the sixth consecutive month - supported by stronger customer demand - but the growth rate slipped to a six-month low amidst an ongoing drag from falling export orders.
Manufacturing production expanded for the same reason, though growth also eased to a six-month low as some firms cited difficulties in obtaining raw materials. Meanwhile, employment decreased for the third month in a row due to minor staff resignations.
Transportation bottlenecks and climbing oil prices fueled a sharp acceleration in input costs, driving the fastest rise in purchase prices since June. Higher fuel expenses and adverse weather conditions led to marked delays in suppliers’ delivery times, lengthening delivery periods to the greatest extent since April. In response to rising cost pressures, manufacturers increased their own output prices at a sharper pace following a slight rise in September.
Despite these operational headwinds, business optimism regarding the 12-month outlook for production climbed to an eight-month high, supported by hopes for improved raw material availability and better market conditions.
“Vietnamese firms are battling to maintain growth at present amid headwinds that are making their operations more challenging. New orders continued to rise in October, feeding through to a solid increase in production, but in both cases rates of expansion slowed from September,” said Mr. Andrew Harker, Economics Director at S&P Global Market Intelligence.
“The limits to growth were often due to the international environment. Fuel and transportation costs rose amid higher oil prices, while companies reported difficulties importing and exporting products. While firms are able to maintain improvements for now, they will be hoping for a more conducive environment to growth in the months ahead.”
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