Illustrative photo (Photo: VNA)HCM City (VNA) – Manufacturers in Vietnam continued tostruggle in the face of weak market demand as the second quarter drew to aclose. Output and new orders fell again, with the former in part reflectingpower outages caused by heatwaves, according to S&P Global.
The S&P Global Vietnam Manufacturing Purchasing Managers'Index™ (PMI) stayed below the 50.0 no-change mark for the fourth month runningin June, signalling a sustained deterioration in the health of the sector. At46.2, up from 45.3 in May, the latest reading pointed to a solid decline inoperating conditions.
According to S&P Global, reports of demand weakness wereprevalent throughout the latest survey, with deteriorating market conditionsthe primary cause of the latest reduction in new orders.
Total new business was down for the fourth successive month, andat a solid pace which was nonetheless much softer than that seen in May. Newexport orders decreased more quickly than total new business amid decliningdemand in international markets.
The fall in new orders meant that backlogs of work continued todecrease, while manufacturers responded to reductions in workloads by loweringtheir employment levels and purchasing activity.
In addition, purchasing activity was likewise reduced for thefourth month running, albeit only marginally at the end of the second quarter.The reduction in input buying and lower new orders led to a drop in stocks ofpurchases.
Stocks of finished goods also declined as production volumeseased, the second successive month in which this has been the case.
The weak demand environment acted to ease pressure on prices inJune. In fact, input costs decreased for the second consecutive month, and at asolid pace that was the sharpest since April 2020. Falling input prices meantthat firms had some leeway to reduce their own charges in a bid to stimulatedemand. Output prices were down for the third month running, with the latestcut to charges the most pronounced in just over three years.
As well as reducing pressure on prices, the lack of demandthroughout the manufacturing sector also led to spare capacity in supplychains. Suppliers' delivery times shortened to the greatest extent in almost 12years, and to the second-largest degree since the survey began in March 2011.
The difficulties for firms signalled across a range of the Junesurvey's indicators meant that business confidence remained relatively muted,despite picking up from May's six-month low. Manufacturers were stilloptimistic that output will increase over the coming year, however, amid hopesfor a recovery in market demand and the securing of new customers.
Andrew Harker, Economics Director at S&P Global MarketIntelligence, said that the latest S&P Global Vietnam Manufacturing PMIpaints a bleak picture of conditions in the sector at the end of the secondquarter, with a lack of demand the key issue facing firms./.
