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Manufacturing rebounds from typhoon Yagi, but challenges persist

By Dat Thanh

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HCMC – Vietnam’s manufacturing sector showed signs of recovery in October following the severe impact of typhoon Yagi in September. However, recent PMI data from S&P Global highlights ongoing challenges that continue to hinder a robust rebound.

The S&P Global Vietnam Manufacturing Purchasing Managers’ Index (PMI) climbed to 51.2 in October, indicating an expansion after September’s contraction at 47.3. This improvement signals renewed growth in output and new orders as factories resumed operations post storm.

“October data showed that the recovery from the disruption caused by typhoon Yagi got underway during the month,” noted Andrew Harker, economics director at S&P Global Market Intelligence. “With firms seeing a rise in new orders and expanding production.”

Despite the positive shift, the recovery pace is moderate, with lingering disruptions from the storm and subsequent flooding impacting supplier deliveries and leading to backlogs in production.

“Some companies are still feeling the effects of the storm, limiting expansion rates,” Harker added. “We anticipate stronger growth as more manufacturers reach full capacity by year-end.”

The report also points to rising input costs driven by currency fluctuations and higher commodity prices, particularly for oil and metals. While some of these costs have been passed on to consumers, inflationary pressures remain relatively low.

Purchasing activity rose in line with new orders and expected production increases, though the growth rate was modest. Input stocks declined, though at a slower rate than the near-record depletion in September, as firms tapped into inventory to support production.

Despite these challenges, manufacturers are optimistic about the future, driven by rising sales and hopes for stable market conditions. However, sentiment has dipped to a nine-month low, with some firms expressing concerns about uncertainties surrounding the upcoming U.S. presidential election.

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