Việt Nam's manufacturers see optimistic outlook despite low February PMI

Việt Nam's manufacturers see optimistic outlook despite low February PMI

In a report released on March 3, S&P Global noted that the muted start to 2025 for the Vietnamese manufacturing sector continued into February, with weak demand leading to further reductions in new orders and production.

Electronic meter production line in Central Power Corporation's Electronic Measurement Equipment Manufacturing Center (EVNCPC EMEC). — VNA/VNS Photo

The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) was below the 50.0 no-change mark for the third consecutive month in February, despite rising slightly to 49.2 from 48.9 in January. 

In a report released on March 3, S&P Global noted that the muted start to 2025 for the Vietnamese manufacturing sector continued into February, with weak demand leading to further reductions in new orders and production. 

As a result, firms scaled back employment again. On the price front, the pace of input cost inflation eased to a 19-month low and charges were reduced for the second month running. 

After falling for the first time in four months during January, new orders decreased again in February. The rate of contraction was modest but quickened to the fastest since last September. 

Muted export demand was highlighted by a further solid decline in new business from abroad, the fourth reduction in as many months. 

Bucking the wider trends across the sector during February, purchasing activity increased slightly. In some cases, rising input buying reflected confidence in the upcoming path of manufacturing output. 

Another factor behind the rise in purchasing activity seen in February was a desire to make sure materials were secured amid uncertainty around availability and supply-chain delays. 

Business confidence strengthened for the second month in a row to the highest since June last year. 

Andrew Harker, Economics Director at S&P Global Market Intelligence, said: "Firms were increasingly optimistic about the future path of output, although confidence was often based on hopes that economic conditions will be stable in the months ahead.

"Transportation issues were a key headwind for the sector in February, with respondents citing problems with the speed and availability of freight, as well as higher costs. 

"Firms hope to see an alleviation of these supply-side constraints, alongside demand improvements, as the year progresses."

In contrast to the rise in input costs, manufacturers lowered their selling prices for the second consecutive month in response to a weak demand environment. The fall was slight but faster than in January. 

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