HCMC – Vietnam’s manufacturing sector saw new orders down in April as input cost inflation surged to its highest level in 15 years, driven by rising fuel prices.
The S&P Global Vietnam Manufacturing Purchasing Managers’ Index (PMI) fell to 50.5 in April from 51.2 in March, a seven-month low, signalling only marginal improvement in business conditions despite a tenth consecutive month of expansion.
Output continued to grow for a twelfth straight month, supported by ongoing projects and resilient demand. However, the pace slowed to a 10-month low amid rising costs, supply shortages and instability linked to the Middle East conflict.
New orders contracted for the first time in eight months as higher prices reduced demand. Export orders declined more sharply, falling for a second consecutive month due to increased transportation costs.
Input costs rose rapidly, with inflation accelerating to a 15-year high. More than half of surveyed firms reported higher input prices, largely due to increased fuel, oil and shipping costs. Output prices also rose sharply, marking the fastest increase since April 2011.
With demand weakening, manufacturers cut staffing levels for a second straight month through layoffs and reduced working hours. Some firms also reported employee resignations.
Backlogs of work dropped for the fourth time in five months, falling at the fastest rate since September. Firms also reduced purchasing activity and inventories at the start of the second quarter, although the fall in input buying was modest.
Supply chain pressures intensified, with longer delivery times due to higher shipping costs and raw material shortages. Supplier performance deteriorated to the greatest extent in four-and-a-half years.
Business confidence weakened to a seven-month low amid concerns over the Middle East conflict, though firms still expect output to increase over the coming year, supported by hopes of improved demand and more stable conditions.
Andrew Harker, economics director at S&P Global Market Intelligence, said rising fuel, oil and transportation costs were weighing on both demand and supply, adding that output growth could come under further pressure if conditions do not improve.
