Vietnamese manufacturing sector shows marginal growth in February

The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) posted 50.4 in February, indicating a marginal improvement in the sector's health. New orders, particularly from abroad, contributed to this growth, although the rate of growth in new export orders slowed, S&P Global said in a press release.

Despite the growth, purchasing activity saw a slight decrease as companies opted to draw down inventories to meet demand. This strategy, however, led to a depletion of post-production inventories at the fastest rate in four months.

One notable trend was the increase in selling prices, driven by higher input costs. While the rise was modest, it reflects the challenges faced by manufacturers in managing costs amidst global economic fluctuations.

Despite challenges such as shipping delays and rising transportation costs, business confidence remains high, with around 55 per cent of respondents expressing optimism. This positive sentiment is supported by production expansion plans and expectations of continued new order growth.

Andrew Harker, economics director at S&P Global Market Intelligence, said: “Vietnamese manufacturers were able to build on the return to growth seen in January with a further expansion in February. Particularly positive elements of the latest PMI survey were renewed job creation and the strongest business confidence for a year.

“The overall expansion remained relatively muted, however, and this led to further caution with regards to purchasing and inventory holdings. Likewise, although output prices increased following a fall in January, the rate of inflation was only marginal as some firms remained reluctant to hike prices in a competitive environment. Manufacturers will need to see stronger and sustained growth of new business before they can be confident enough to invest in inputs and start to raise their selling prices more in line with their own cost burdens.”

Fibre2Fashion News Desk (KD)