Vietnam manufacturing sector goes into decline in Nov 2022: S&P Global

03 Dec '22

2 min read

Pic: Shutterstock

Deteriorating global economic conditions pushed the Vietnamese manufacturing sector into decline during November, according to S&P Global, which recently said renewed reductions were seen in output, new orders, employment and purchasing activity, while business confidence fell sharply.

Currency depreciation also affected manufacturers during the month, leading to a slightly faster rise in input costs.

Meanwhile, output prices decreased for the first time since August 2020.

The S&P Global Vietnam manufacturing purchasing managers' index posted below the 50.0 no-change mark during November, thereby ending a 13-month sequence of expansion.

At 47.4, down from 50.6 in October, the reading signalled a solid deterioration in business conditions during the month.

New manufacturing orders decreased for the first time in 14 months midway through the final quarter of the year, often reflecting weakening international demand.

In fact, new export orders decreased more quickly than total new business. With new orders falling, Vietnamese manufacturers also lowered production, the first decline since March.

The rate of contraction was solid and the fastest since September 2021. Consumer and intermediate goods firms saw output decrease, while investment goods producers signalled a further expansion.

The fall in input buying ended a 13-month sequence of growth and fed through to a second successive reduction in stocks of purchases. Post-production inventories also decreased. Reduced demand for inputs helped some suppliers to speed up their deliveries in November.

This was outweighed, however, by delays caused by shortages of materials and fuel. As a result, lead times lengthened marginally and for the first time in four months.

Although input costs increased at a relatively muted pace again in the latest survey period, the rate of inflation quickened to a four-month high.

Selling prices in Vietnam decreased for the first time since August 2020, S&P Global said in a release. Business confidence dropped sharply, due to falling new orders and concerns about international demand.

Sentiment was down to the lowest in 14 months. Hopes for a recovery in demand over the coming year meant that some firms remained optimistic in the 12-month outlook for production.

Fibre2Fashion News Desk (DS)

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