Vietnam manufacturing expansion weakens on global economic slowdown: S&P Global

Manufacturing in Vietnam, an emerging production hub, continued to expand in October but at a slower pace against September due to global economic weakness, S&P Global said Tuesday.

The country’s October Manufacturing Purchasing Managers' Index (PMI) score was 50.6, slightly down compared to 52.5 in September, and remains above the boom-or-bust line of 50 that separates expansion from contraction, said the market information and analysis giant.

The latest result was the lowest in the current 13-month sequence of improvement. Andrew Harker, economics director at S&P Global Market Intelligence, said: “October PMI data provides us with the first signs that weakness in the global economy is starting to impact on growth at Vietnamese manufacturers.”

He added, “Continued expansions in output and employment alongside muted price and supply pressures may help the sector remain in growth territory as the end of the year approaches."

S&P Global explained that central to Vietnam’s overall growth moderation in October was a softer increase in new orders. Total new business was up only slightly, and to the least extent since the current expansionary period began in October 2021.

The American company said manufacturers in Vietnam continued to expand production at the start of the final quarter of the year in response to further improvements in new orders, but the rate of expansion eased and was at a three-month low.

For the third successive month, suppliers' delivery times shortened marginally in the country in October, representing a continued stabilization of supply chains following a sustained period of disruption, S&P Global said.

The government has put Vietnam’s GDP growth forecast for this year at 8%, higher than its target of 6-6.5%. The figure is higher than the predictions of some international institutions.

On September 27, the World Bank said the country's economic expansion could hit 7.2% this year, the highest in Southeast Asia. On September 21, the Asian Development Bank put Vietnam’s growth estimation at 6.5% this year on strong economic fundamentals, key to fast recovery. The figure is the highest in Southeast Asia and equals the Philippines'.