Home » Business, Statistics » Vietnam’s manufacturing index falls sharply in June

Many coVietnam’s manufacturing index falls sharply in Junempanies in the manufacturing sector have to cut back their production due to a sharp decline in export orders.

Since the survey began in April 2011, the seasonally adjusted HSBC Vietnam Manufacturing PMI has slumped to its third-lowest reading at 46.4, down from 48.8 in May.

Manufacturing production in the domestic market was substantially reduced since inventories kept rising at a record-setting pace.

The weak purchasing power led to a reduction in employment. Part of the latest cut in headcounts reflected the build-up of spare capacity in the sector, as highlighted by a substantial drop in the level of work-in-hand (but not yet completed) at many factories.

Purchase orders dropped sharply in June, contributing to a slight decline in stocks of raw materials and semi-manufactured goods.

Manufacturers argued that successful negotiations with vendors for faster payment would make delivery times shorter up to a point.

Price pressures, they said, continued to ease during the latest survey month. Although average input costs have risen throughout the year-to-date, the latest rate of inflation was only marginal and the least marked during the current sequence of increase. Meanwhile, manufacturers cut their average selling prices in an effort to stimulate sales.

Trinh Nguyen, Asia Economist at HSBC, says “The sharp decline in manufacturing output suggests that domestic weakness will further weigh on overall business activity. “

“Sales are sluggish despite discounting measures due to a low appetite for consumption. Coupled with this, external conditions have weakened, with falling demands from China and the Republic of Korea. With June headline inflation accelerated, the central bank will adopt a wait-and-see mode for now,” she says.


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