The health of VN manufacturing sector worsens amid Covid-19 crisis

The Purchasing Managers’ Index (PMI) in Vietnam fell from 49 points in February to 41.9 points in March. 

The latest report of HIS Markit showed the sharpest PMI decline in the last nine years since the day the firm began conducting market surveys and collecting data in Vietnam.

The decline is even sharper than the record decrease in July 2012.

The index may see a further decrease as more and more businesses have had to halt production activities in the first half of April as per the government’s request in an effort to prevent the coronavirus spread.

The health of VN manufacturing sector worsens amid Covid-19 crisis



Covid-19 had strong adverse impact on Vietnam’s manufacturing sector in March 2020 with the output, number of orders and jobs in the month seeing record decreases. The optimism about business also dropped to a low when manufacturers showed concerns about the tile period for the epidemic to be contained.

Forty-two of polled businesses said the output fell by the end of Q1. The sharp decreases occurred in all three fields – consumer goods, intermediate goods and basic investment goods.

Andrew Harker from HIS Markit said it is not a surprise that Covid-19 has had a serious impact on Vietnam’s manufacturing sector.

Because of the input material shortage, the input production cost increased slightly in March. Meanwhile, the prices of finished products saw a sharp decrease, the sharpest since July 2012.

More than one quarter of businesses predicted an output decrease in the year to come. However, less than 39 percent of businesses think the output will be higher than the current level.
 

More than one quarter of businesses predicted an output decrease in the year to come. However, less than 39 percent of businesses think the output will be higher than the current level.


“Many of the survey’s parameters have dropped to record lows and business optimism has decreased. The key issue is when the international community can control the pandemic. When this happens, the output will increase again,” Harker said.

According to Vitas, the countries which consume large proportions of Vietnam’s textiles and garments, including the US (which consumes 50 percent of export turnover) and the EU (12 percent), have fallen into crisis because of the pandemic.

Big brands in the world have cut orders and closed their shops in March and April, while some brands have announced closure until June.

Tuoi Tre cited a report of MOLISA (the Ministry of Labor, War Invalids and Social Affairs) as showing that 10 percent of businesses had to scale down production in February, while the figure was 15 percent in the first two weeks of March.

Meanwhile, the Hanoi Taxation Agency reported that more than 9,000 business households in the city shut down or suspended business in the first two months of the year. Of this, 3,000 business households said they gave up or suspended business because of Covid-19.

Mai Lan 

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