Industrial production is forecast to increase 6.6% in 2023. (Photo: VNA) S&P Global noted the Vietnamesemanufacturing sector continued to face challenging business conditions in theopening month of 2023. Production and new orders continued to decline. Thatsaid, there were some signs of improvement in demand as new business fell at asofter pace, helped by a renewed expansion in new export orders.
The S&P Global VietnamManufacturing Purchasing Managers' Index (PMI), released on February 1, posted47.4 in January, up from 46.4 in December but still pointing to a solid monthlydeterioration in the health of the manufacturing sector.
January data signalled a furthermarked decline in manufacturing production, albeit one that was slightly softerthan seen in December. Lower new orders were often behind falling output, withsome firms indicating that customers had sufficient stock holdings and sodidn't need to purchase at present.
Total new orders were down for thethird month running in January as demand conditions remained challenging. Thatsaid, there were some signs of improvement, particularly with regards to newexport orders which rose for the first time in three months. As such, total newbusiness fell at a modest pace that was the softest in the current period ofdecline.
The cost of raw materials, alongsidefalling workloads, meant that some firms lowered their purchasing activityagain in January. Some signs of improvement in demand conditions encouragedother manufacturers to expand input buying, so that overall purchasing activitywas broadly unchanged. Declines in the purchasing of inputs in previous months,however, led to a reduction in stocks of purchases.
Businessconfidence improved to a three-month high amid hopes that demand conditionswill strengthen over the course of the year, feeding through to growth ofoutput. The relaxation of pandemic restrictions in the mainland China wasanother factor behind the positive outlook. More than half of the respondents wereoptimistic that production will rise over the next 12 months, according to S&PGlobal.
Andrew Harker, Economics Director atS&P Global Market Intelligence, said: “Although demand conditions forVietnamese manufacturing firms remained challenging at the start of 2023,leading to further declines in output, new orders and employment, there weresome more positive signs from the latest PMI survey. One of the main positivesin January was a renewed expansion in new export orders, with the decline intotal new business softening as a result.
“The loosening of COVID-19restrictions in Mainland China, plus signs that downturns in Europe and the USmay be less severe than feared, provided optimism that growth in Vietnam couldbe around the corner. Indeed, business confidence improved to a three-monthhigh at the start of the year. S&P Global Market Intelligence isforecasting a rise in industrial production of 6.6% in 2023," he added./.
VNA
