Vietnam’s manufacturing sector recorded modest growth in November, with the Purchasing Managers’ Index (PMI) maintaining a score above the 50-point threshold for the second consecutive month, signaling continued expansion. However, the PMI dipped slightly to 50.8 in November, down from 51.2 in October, reflecting a slower pace of improvement.
An S&P Global report highlighted three key challenges affecting the sector. First, weaker export growth was noted, as new orders expanded at a slower rate, driven by declining global demand. Second, labor force reductions continued for the second consecutive month, with companies cutting costs by reducing employment, which led to rising backlogs of unfinished work. Third, supply chain bottlenecks persisted, with supplier delivery times increasing for the third straight month due to transportation delays and raw material shortages.
Despite these challenges, some firms ramped up production to meet growing domestic demand and attract new customers. However, weaker global economic conditions continued to limit overall growth, and new export orders declined after a brief improvement in the previous month. Input costs rose modestly, driven by supply constraints and currency depreciation, resulting in slight increases in output prices.
Business activity slowed further, with reduced purchasing activity and declining inventories as firms worked to fulfill outstanding orders. Confidence among manufacturers fell to its lowest level since January, reflecting concerns about the near-term outlook. However, optimism for 2025 remains high, as businesses anticipate growth fueled by new product launches, business expansions, and an eventual rebound in demand.
Andrew Harker, Economics Director at S&P Global Market Intelligence, acknowledged the impact of weaker global demand on Vietnam’s manufacturing sector. He expressed optimism that a recovery in demand could restore confidence and encourage firms to invest in additional capacity, supporting long-term growth.
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