June data pointed to a further worsening of business conditions across the Vietnam manufacturing sector, and the rate of deterioration accelerated to the fastest in four months, according to the HSBC Purchasing Managers Index (PMI), which was issued on July 2.

This was highlighted by a drop in the seasonally adjusted HSBC Vietnam Manufacturing PMI from 48.3 in May to 46.6 in June.

The index has now posted below the neutral 50.0 value for three consecutive months.

The overall deterioration in business conditions reflected a marked decline in new order intakes during June.

Incoming new business fell for the second successive month and at the joint-fastest rate since the survey began in April 2011.

Anecdotal evidence widely suggested that the global economic slowdown had resulted in a squeeze on spending among clients.

Latest data pointed to a marginal reduction in new export work, which was attributed to softer demand from both developed and emerging markets.

Lower levels of new orders resulted in reduced production requirements in June, with output volumes declining for the third consecutive month and at the steepest pace since February.

Manufacturers sought to utilise spare capacity in June by reducing their levels of work-in-hand (but not yet completed).

Outstanding business dropped at the joint-fastest pace in 15 months of data collection.

Post-production inventory levels increased at a solid rate in June, reversing the downward trend seen in May.

A number of manufacturers noted that lower-than-expected sales had resulted in unwanted inventory building.

This, in turn, encouraged efforts among firms to alleviate pressure on working capital by reducing their input buying.

June data signalled a sharp drop in purchasing activity and a steeper fall in pre-production inventories than was recorded in May.-VNA