Record falls were seen in output, new orders, employment and purchasing of the manufacturing sector. (Photo: tapchitaichinh.vn)Hanoi (VNS/VNA) - The Vietnamese manufacturing sector saw an intensificationof the downturn last month with Manufacturing Purchasing Managers' Index (PMI)decreasing to 32.7 as a result of the COVID-19.
A survey of Nikkei and IHS Markit released on Monday showed the index was welldown on the reading of 41.9 seen in March, which itself had signalled a recordmonthly deterioration in the health of the sector. Business conditions have nowworsened in each of the past three months.
The extent of the decline was unprecedented in more than nine years of datacollection.
According to the survey, record falls were seen in output, new orders,employment and purchasing amid company shutdowns and the cancellation oforders. Meanwhile, business sentiment turned negative for the first time sincethe survey began.
“The impact of COVID-19 was most keenly felt with respect to manufacturingproduction and new orders. Both fell severely during April amid ordercancellations and company closures. The decline in overall new business wasoutpaced by that seen for new export orders, reflecting the effects of thevirus in markets all around the world,” the survey stated.
Approximately two-thirds of respondents signalled that output decreased duringthe month. As such, declines were registered across each of the three broadsectors covered by the survey, led by intermediate goods firms.
A lack of new orders fed through to a steep reduction in backlogs of work.Lower workloads led manufacturers to reduce staffing levels, while there werealso some reports of employees having resigned. The resulting decrease inemployment was the sharpest on record, the second month running in which a newlow has been registered.
Purchasing activity also decreased at a substantial pace, linked to lower neworders, a reduction in production requirements and company closures. As aresult, stocks of purchases declined sharply. Stocks of finished goods alsofell, albeit to a lesser extent than in March.
Meanwhile, difficulties obtaining imported goods, material shortages and issuestravelling meant that suppliers' delivery times lengthened to the greatestextent since the survey began in March 2011.
Input prices decreased for the first time in 16 months during April, and at amarked pace that was the fastest since September 2015. Panellists linked thefall in input costs to a lack of demand for inputs and lower oil prices.
With input costs falling, manufacturers continued to lower their output prices,extending the current sequence of decline to three months. The latest reductionwas sharp and the joint- fastest in the survey's history, equal with that seenin June 2012.
For the first time in the series so far, firms were pessimistic regarding theoutlook for production over the coming year. Sentiment dropped amid fears thatthe impact of the COVID-19 pandemic could last for a prolonged period. Around40 percent of respondents signalled a negative outlook in April.
“The latest Vietnam manufacturing PMI report highlights the devastating impactthat the COVID-19 pandemic and efforts to restrict its spread have had on theVietnamese manufacturing sector. April saw an unprecedented decline in thesector, led by severe contractions in output and new orders. Whether Aprilproves to be the nadir of the downturn will depend on how firms and theircustomers respond to an easing of the lockdown and reopening of businesses thathave been closed temporarily," Andrew Harker, Economics Director at IHSMarkit, said./.
VNA
