Vietnamese manufacturing sector shows signs of recovery in April

One of the notable highlights is the solid expansion in new orders, which has injected momentum into production activities. This uptick in demand, coupled with successful efforts in securing new customers, has contributed to the sector's overall health. Moreover, new export orders have also seen a slight uptick, albeit softer than the growth in total new business.

Manufacturers have responded to the increasing demand by offering discounts to customers, despite facing rising input costs. While input prices have experienced an upward trend, the rate of inflation remains relatively subdued, allowing room for pricing adjustments without significant pressure on margins, S&P Global said in a press release.

However, the growth in production has been accompanied by challenges. Firms have scaled back employment, reflecting the need to adapt to fluctuating market conditions. This reduction in staffing levels has led to difficulties in meeting order deadlines, resulting in a marginal increase in backlogs of work.

Although purchasing activity has seen a slight increase in response to higher new orders, firms remain cautious about holding inventories. Consequently, both stocks of purchases and finished goods have decreased, albeit at a softened pace compared to previous months.

Despite these challenges, there are signs of optimism for the future. While market instability has dampened confidence levels, there is a belief among industry players that a more stable demand environment will emerge in the coming months. This optimism fuels expectations of increased output over the next year, underscoring the resilience of the Vietnamese manufacturing sector.

Andrew Harker, economics director at S&P Global Market Intelligence, said: “There was a welcome return to growth of new orders in the Vietnamese manufacturing sector during April following recent weakness. There were some signs that the extent of the rebound perhaps took firms by surprise given that they had made the decision to release workers following the recent period of muted demand conditions, thus resulting in a build-up of backlogs. We could therefore see some of these workers brought back in the near future. More generally, the recent up and down nature of new order inflows was a concern for firms looking forward. We will hopefully see a more stable environment in the months ahead, helping manufacturers to plan production and resourcing effectively."

Fibre2Fashion News Desk (KD)