Manufacturing sector maintains sustained growth despite storms

Manufacturing sector maintains sustained growth despite storms

The Vietnam Manufacturing Purchasing Managers' Index (PMI) posted 53.8 in November, down slightly from 54.5 in October but still signalling a solid monthly improvement in business conditions in the manufacturing sector despite storm disruption.

A production line of Honda Vietnam in Đồng Văn II Industrial Park in Ninh Bình Province. Expected improvements in new orders and hopes for calmer weather conditions supported optimism in the year-ahead outlook for output. —  VNA/VNS Photo

The Vietnam Manufacturing Purchasing Managers' Index (PMI) posted 53.8 in November, down slightly from 54.5 in October but still signalling a solid monthly improvement in business conditions in the manufacturing sector despite storm disruption, the latest survey of S&P Global shows.

According to the survey, operating conditions have now strengthened in five consecutive months.

A third successive monthly increase in new orders helped to drive production growth again in November, although rates of expansion in both output and new business eased from October.

New export orders, meanwhile, increased at a faster pace, with the rate of growth quickening to a 15-month high.

Panellists noted improving demand from mainland China and India in particular.

Some firms reported that stormy weather conditions during November had limited production growth, but output nonetheless increased for the seventh month running.

The severe weather conditions mainly impacted supply chains and the ability of manufacturers to complete work on time.

Suppliers' delivery times lengthened markedly, and to the largest extent since May 2022. Meanwhile, firms posted a rise in their backlogs of work for the second consecutive month. Moreover, the rate of accumulation was the sharpest since March 2022.

Outstanding business accumulated despite a second successive monthly rise in employment as firms responded to higher output requirements. Staffing levels increased modest, but to the largest extent in almost a year-and-a-half.

According to respondents, new staff were often hired on a full-time basis.

In some cases, manufacturers used existing inventories to help fulfil orders, resulting in a further reduction in stocks of finished goods, and one that was more pronounced than in the previous survey period.

Another impact of the storms was to contribute to higher costs for raw materials as supply was restricted. Input prices increased sharply, and at the second-fastest pace since July 2024, despite the pace of inflation easing from October.

The rate of output price inflation also softened in November, but remained solid as firms passed on higher input costs to their customers.

Firms increased their purchasing activity for the fifth month running in November as output requirements rose. Moreover, the rate of expansion quickened to a four-month high.

Stocks of inputs also increased, accumulating for the second successive month. The rise was only slight, however, as inputs were often used to support production.

Expected improvements in new orders and hopes for calmer weather conditions supported optimism in the year-ahead outlook for output. Close to half of respondents predicted a rise in production, with overall sentiment hitting a 17-month high.

Andrew Harker, Economics Director at S&P Global Market Intelligence, said: "The pick-up in growth seen in October was largely sustained through to November as the Vietnamese manufacturing sector looks to be enjoying a positive end to the year.

"While rates of expansion in output and new orders eased, firms took on extra staff at a stronger pace in order to deal with workloads.

"Growth was recorded despite reports of disruption to supply chains and production lines caused by stormy weather in recent weeks.

"There is the potential, therefore, for continued growth in the months ahead as firms catch up with delayed projects." 

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