Vietnam industrial production shrinks sharply in Jan over holiday, lack of orders

Vietnam's index of industrial production (IIP) fell 14.6% in January from the previous month and 8% from the same period last year due to the Lunar New Year holiday and a lack of orders.

Due to the Lunar New Year holiday (Tet), the number of working days in January was 8-10 days fewer than December and January 2022. Last year, Tet took place in February.

Another reason was a drop in orders and the size of orders, the General Statistics Office (GSO) reported.

Industrial production has started to slow since the fourth quarter of 2022 due to the declining number of orders amid the global economic downturn.

The index of the processing and manufacturing industry in January fell 9.1% year-on-year, while the mining industry saw a 4.9% drop. These were the biggest declines among sectors.

Key industrial products posting significant declines included liquefied petroleum gas (LPG) (down 33.3%); motorbikes (32.1%); automobiles (31.7%); steel bars, angle steel bars (26.2%); sugar (25.7%); rolled steel (25.6%); televisions (24%); casual wear (23.4%); chemical paint (14.6%); fabrics made from natural fibers (13.6%); cement (13.3%); and processed seafood and fresh milk (both 9.4%).

Vietnam’s IIP in 2022 went up 7.8% year-on-year, with growth of 6.8% recorded in Q1, 9.8% in Q2, 10.9% in Q3, and 3% in Q4.

The country's IIP recorded a 1% fall in December from the previous month, due to a lack of orders, high input material prices, and a shortage of input materials, according to the GSO.

The S&P Global Vietnam Manufacturing Purchasing Managers' Index™ dropped to 46.4 in December 2022 from 47.4 in November, amid deteriorating overseas and domestic demand, said S&P Global.

At below the 50.0 no-change mark for the second month running, the PMI signaled a further deterioration in business conditions in the country's manufacturing sector.

The S&P Global PMI for Vietnam in November was 47.4, down from 50.6 in October and 52.5 in September.

The latest decline was the most marked since the pandemic-related downturn seen in the third quarter of 2021.