Manufacturing mechanical products at Machinery Spare Part No.1 JSC in Song Cong city, Thai Nguyen province. (Photo: VNA) HCM City (VNA) – The VietnamManufacturing Purchasing Managers' Index (PMI) asreported by S&P Global, edged down to 49.6 in October from 49.7 in the previous month, indicating a second consecutivemonthly decline in the manufacturing sector.
It was the second straight month of declinein factory activity, as output continued to shrink while new orders grew theleast in the current sequence of expansion, with new export orders softening.
S&P Global’s reportpoints out that overall business conditions in the Vietnamese manufacturingsector deteriorated slightly last month as firms continued to scale backproduction despite modest improvements recorded in new orders.
The number of new orders has increased for the third consecutivemonth, indicating some improvement in customer demand. However, the growth rateremains slight and is the weakest in the current upturn, S&PGlobal said.
The incomplete statistics show that customers are stillhesitant to commit to new orders.
Employment was broadly unchanged in October,thereby ending a seven-month sequence of falling staffing levels, whilebacklogs of work declined at the strongest since June 2021.
Meanwhile, purchasing activity continued torise solidly, expanding for the third month running amid efforts to buildreserves of inputs ahead of expected increases in production.
On the price front, input and output costinflation accelerated to an eight-month high due to currency weakness andrising oil prices.
According to S&P Global’s survey, a furtherbuild-up of inflationary pressures was signaled at the start of the fourthquarter, with both input costs and output prices rising at sharper rates.
Moreover, the respective rates of inflation each hit eight-month highs. Therising oil prices have pushed up inputcosts, with higher prices for fuel and plastics among those feeding on fromrises in the cost of oil.
On the other hand, finished goods inventories also decreased asmanufacturers used inventory to meet new orders instead of increasingproduction.
According to Andrew Harker, Economics Director at S&P Global Market Intelligence, PMI data inOctober painted a similar picture to that for the end of the third quarter thisyear. New orders continued to rise, but only at a modest pace and one whichwasn't sufficient to encourage firms to expand their production. Instead,manufacturers were content to draw down inventories of finished products tosatisfy demand.
There was some more positive news on the employment front as aseven-month period of job cutting came to an end. This, along with risingpurchasing and positive sentiment, suggests that firms are becoming moreconfident that recent demand improvements will be sustained in next months, headded./.
