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Tuesday, November 29, 2022

Stockbuilding seen in manufacturing sector

By Le Hoang

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HCMC – Stockbuilding has occurred in both inputs and finished goods in the Vietnamese manufacturing sector at the end of the third quarter of the year, S&P Global said in its latest report.

As the S&P Global Vietnam Manufacturing Purchasing Managers’ Index (PMI) registered 52.5 in September, a fraction lower than the figure in August at 52.7, business conditions in the sector show signs of improvement.

According to the report, released on October 3, rising new orders have fueled the growth of output and purchasing activity.

Operating conditions have strengthened over the past 12 months and new order growth has also extended to a year as the number of new orders grew strongly in September amid reports of improving customer demand.

“The Vietnamese manufacturing sector continued to tick along nicely at the end of the third quarter, with the PMI now having signaled overall expansion throughout the past year. A much more benign price and supply environment is providing support, while demand also improved again in September,” said Andrew Harker, Economics Director at S&P Global Market Intelligence.

With total new orders continuing to rise, manufacturers expanded their production and boosted their buying activities at the end of the third quarter.

However, new export orders softened from August, while some survey participants said demand in export markets showed signs of weakening. 

The rise in new orders from abroad was the slowest in 10 months. 

This led to stocks of finished goods increasing to the greatest extent in close to a year-and-a-half, while inventories of purchased goods rose for the first time in six months due to increasing new orders and higher buying activities.

Some survey respondents also indicated that finished goods inventories had risen due to sales volumes coming in below expectations during the month.

However, new order growth shows signs of slowing, especially orders from abroad, Harker said. 

This would make stocks of finished goods continue to pile up as sales volumes of enterprises were lower than expected and may force manufacturers to reduce production growth in October, he added.

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