Vietnam's manufacturing sees 3rd straight month of decline in Apr 2023

There were widespread reports of customer demand weakness. The impact of this was most clearly felt with regards to new orders, which declined rapidly and to the greatest extent in 20 months. Difficulties in securing sales were also evident in export markets, with new business from abroad decreasing for the third month running.

With new orders continuing to fall, firms also reduced output midway through the second quarter of the year. Production was down for the third successive month, and at a marked pace that was the fastest since January. Output decreased across each of the three broad categories of manufacturing, with the sharpest decline at intermediate goods producers, as per S&P Global.

Demand weakness caused a further hit to business confidence, which dropped for the third month in a row to the weakest since last November. Any lingering optimism was often due to hopes that a recovery would get underway in the sector in the coming months.

Some firms responded to lower workloads by cutting staffing levels. This, added to some reports of voluntary resignations, meant that employment decreased again in May.

Although firms reduced their operating capacity, they were still able to make substantial inroads into their backlogs of work in May. Outstanding business decreased at the sharpest pace since June 2021.

Manufacturers cut their purchasing activity at a marked pace, extending the current sequence of reduction to three months. In turn, stocks of purchases also decreased, and to the greatest extent in just under two years.

Stocks of finished goods were also down as firms adapted production to lower new orders. The fall was the first in three months.

Reduced demand for inputs continued to mean a lack of pressure on supply chains. As a result, vendor performance improved for the fifth month running, and to the joint-largest extent since February 2015.

Waning demand also led suppliers to reduce their prices. Input costs decreased for the first time in three years as a result. The drop in input prices provided some leeway for firms to reduce their own charges in a bid to boost demand. Selling prices decreased for the second month running, and at a broadly similar pace to the previous survey period.

Fibre2Fashion News Desk (DP)