Vietnam's manufacturing sees slower rises in output, new orders in Nov

Slower rises in output and new orders were recorded, with the latter affected by export weakness.

Meanwhile, employment continued to fall amid cost cutting efforts, resulting in a continued accumulation of outstanding business, the rating agency said in a release.

Input costs increased, but relatively modestly, with output prices rising slightly in response.

The S&P Global Vietnam manufacturing purchasing managers' index (PMI) remained above the 50 no-change mark in November and signalled a second consecutive monthly improvement in business conditions following the contraction caused by Typhoon Yagi in September.

At 50.8, however, the reading was down from 51.2 in October and pointed to only a modest strengthening in the health of the sector.

Manufacturing output increased for the second month in a row, but at a slower pace than in October.

Some Vietnamese firms raised production in response to higher new orders, but others reported that demand was relatively muted, leading to the slowdown in growth.

Although total new orders increased amid signs of improving demand and the securing of new customers, weakness in international demand undermined overall growth.

New business from abroad solidly decreased in November following a slight rise in the previous month, with exports down to the largest extent since July 2023.

While output and new orders continued to rise, albeit at weaker rates, employment decreased for the second month running in November.

In some cases, firms lowered staffing levels to help reduce costs. With workforce numbers down, firms again found it difficult to complete orders on time. As a result, backlogs of work increased for the sixth month running, albeit at the slowest pace since June.

Efforts made by firms to limit costs meant that input prices increased at a slightly slower pace in November, and one that was weaker than the average for 2024 so far. Where input prices did rise, it was linked to supply shortages and currency weakness.

Similarly, output prices increased only slightly in November, with the rate of inflation broadly in line with that seen in the previous month.

Manufacturers continued to face lengthening suppliers' delivery times midway through the final quarter of the year. Lead times were extended for the third month in a row, and to a greater degree than was the case in October.

Respondents signalled transportation issues and difficulties for suppliers to source raw materials. At the same time, firms reduced their purchasing activity for the second time in the past three months, following a slight increase in October.

So stocks of purchases decreased again, and at a marked pace. Stocks of finished goods were also down as inventories were used to help meet order requirements. The solid depletion was the most marked since July.

Business confidence ticked down for the second month running and was the lowest since January. Manufacturers remained optimistic that output will rise over the coming year, however, with expectations linked to plans for new product launches and business expansions, plus rising new orders.

ALCHEMPro News Desk (DS)