Vietnam’s September manufacturing index slightly down, new orders up: S&P Global

Vietnam’s manufacturing sector continued to expand in September despite a slower pace, with new orders rising, according to S&P Global.

Vietnam's Purchasing Managers’ Index (PMI) at 52.5 in September is slightly down from 52.7 in August but remained above the 50.0 no-change mark, signaling a further strengthening of business conditions.

“The Vietnamese manufacturing sector continued to tick along nicely at the end of the third quarter, with the PMI now having signaled overall expansion throughout the past year. A much more benign price and supply environment is providing support, while demand also improved again in September,” Andrew Harker, economics director at S&P Global Market Intelligence, said in a Monday release.

“There were some tentative signs of new order growth slowing, however, particularly with regards to exports. This was a factor in a renewed expansion in stocks of finished goods as some firms sold fewer items than expected.”

He noted, “This may lead manufacturers to limit production growth in October, but business confidence remained strong and so the prospects for the final three months of the year appear positive overall.”

The current sequence of new order growth also extended to a year as new business expanded solidly in September amid reports of improving customer demand, the report said. With total new orders continuing to increase, manufacturers expanded their production solidly.

Similarly, employment and purchasing activity each rose solidly again at the end of the third quarter, the credit rating agency's study said. Responding to higher production requirements, firms also increased staffing levels to support new production lines.

Cost pressures in Vietnam were relatively subdued in September, with inflation much slower than recorded earlier in the year. A number of respondents indicated that lower oil prices had helped them to reduce their cost burdens, although there were still some reports of higher raw material prices.

Vietnam’s General Statistics Office (GSO), in its nine-month report on the country’s economic growth, said the nation’s macro-economy was stabilized in the period, inflation put under control, major balances ensured, monetary and fiscal policies conducted flexibly and effectively.

For the whole year, the GSO forecast the national economy could expand 8%, much higher than the 6.5% target.

Vietnam’s economic growth of 8.83% year-on-year in the first nine months is the highest recorded in 12 years. The figure for the same period in 2021 and 2020 - both pandemic years, was 1.42% and 2.12%, respectively. The economy expanded 2.58% last year.