-By Mansi Suryavanshi.
INSIGHTS
- The business environment in Vietnam’s manufacturing sector continued to deteriorate in April, with the sector’s PMI falling to 46.7 from 47.7 in March.
- Due to insufficient demand, it was difficult to get fresh orders, which led to the cut.
- The decrease in new orders resulted in a further reduction in work backlogs and a rise in completed products inventories.
The purchasing managers’ an index (PMI) for the Vietnamese manufacturing sector fells from 47.7 in March to 46.7 in April 2023 as demand remained weak. The measure indicated that business conditions had deteriorated five times in the previous six months, with the most recent decrease is being the steepest of the year.
Manufacturing output fell for the second consecutive month, and at a significant rate, as firms stated that gaining new orders had been difficult during the month due to sluggish demand. According to the S&P Global Vietnam Manufacturing PMI data, the significant decline occurred more quickly than it did in March.
At the beginning of the second quarter of the year, both total new business and new export orders continued to decline, illustrative of the challenges in securing new orders. While new export business declined at a slower rate than during the prior survey period, the rate of contraction in total new orders accelerated.The number of backlogs of work reduced for the fourth consecutive month as a result of declines in new orders, which allowed businesses to further eliminate them.
Meanwhile, finished goods inventories rose to their highest level in two years. Manufacturers kept reducing their personnel numbers by not replacing departing employees and by making job cutbacks in response to decrease workloads. The pace of contraction was also the steepest in a whole year and a half.
Additionally, for the second month in a row, businesses reduced their input purchases in April. A decrease in input demand contributed to the fourth consecutive reduction in average lead times. Few businesses also claimed that better transportation circumstances had enhanced vendor performance.
A fourth straight fall in the stocks of purchases was seen due to weaker input buying. However, because some businesses were encouraged to increase their inventories by optimistic future expectations, the rate of depletion was only slightly higher overall.
Hopes that the present demand downturn would only be transitory and that a rebound would occur over the course of the upcoming year were reflected in the positive attitude. Nevertheless, optimism was at its lowest level of the year.
In April, the rate of input cost inflation decreased for the second consecutive month, softening to the worst level in the previous 35 months of inflation amid rumors of falling raw material prices. Where input costs did rise, businesses typically attributed these increases to increases in fuel and oil prices.
A three-month streak of inflation was broken by a decrease in production prices brought on by a decrease in cost pressures and a calmer demand environment. In the consumer, intermediate, and investment goods sectors, fees were decreased.
