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Saturday, July 13, 2024

Manufacturing conditions weaken further in May

The Saigon Times

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HCMC – The Vietnamese manufacturing sector continued to contract in May due to weakening demand and declining business confidence.

The sector has experienced deteriorating conditions for the third consecutive month as the official manufacturing Purchasing Managers’ Index (PMI) was 45.3 last month, down from 46.7 in April.

This marks the sector’s sharpest decline since September 2021, with new orders slipping rapidly and reaching the lowest level in 20 months. Difficulties in securing sales were also observed in export markets, with outbound shipments decreasing for the third straight month.

In response to falling orders, firms reduced their output in the second quarter of the year. Production has declined for three consecutive months, with the sharpest pace since January.

Andrew Harker, economics director at S&P Global Market Intelligence, expressed concern over the steep slide in new orders, suggesting a potentially prolonged downturn in the Vietnamese manufacturing sector. Businesses responded by reducing output, employment, and purchasing.

Waning demand also led to a decrease in supplier prices, resulting in the first drop in input costs in three years. This provided some flexibility for firms to lower their own prices in an attempt to stimulate demand.

The weakened demand also impacted business confidence, although some firms remained hopeful that a recovery would begin in the coming months.

Harker added that the upcoming data would be crucial in indicating any signs of improvement.

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