return icon Vietnamnet.vn

Vietnam manufacturing output declines on Covid-19 outbreak

Vietnam’s manufacturers are facing an uphill task to keep operation amid restriction measures.

 

{keywords}

The Vietnam Manufacturing Purchasing Managers' Index (PMI) fell to 40.2 in August, down from 45.1 in July and signaling the worst deterioration in the health of the sector since April 2020, according to Nikkei and IHS Markit.

Business conditions have now declined in three successive months.

“Vietnamese manufacturers are facing a near-impossible task at present as the restrictions put in place to try and contain the spread of the Covid-19 outbreak in the country constrain their ability to produce goods,” said Andrew Harker, associate director at IHS Markit, which compiles the survey.

“Firms also revised down their expectations as the prospect of an extended period of restrictions becomes more likely," he added.

Covid-19 restrictions meant that a number of manufacturers have to close their business temporarily, while others reported staff shortages and limits on their ability to produce. As a result, output declined at a substantial pace. The rate of contraction was the second-fastest on record, behind only the one seen in April 2020.

A similar picture was recorded with regards to new orders which decreased for the third month running and at the fastest pace in 16 months. The decline in new export orders also accelerated as Covid-19 restrictions made exporting difficult.

The sector's labor market also suffered amid social distancing restrictions. A number of firms indicated that they were operating the '3 in one spot' policy to maintain some staff presence on-site, but that not all workers were able to participate in this. Overall, employment decreased for the third month running, and at a pace that was the steepest since April 2020.

Severe supply-chain disruption continued, with supplier lead times extending for the longest period on record for the second month in a row. Transportation issues were widely reported, with congestion at ports a result of them being unable to operate at full capacity. Raw material shortages were a secondary factor contributing to longer lead times.

Raw material shortages and transportation issues led to a further steep increase in input costs, with the inflation rate rising the fastest in a decade. In turn, output prices increased, albeit to a much lesser extent than input costs as some firms offered discounts so as to secure sales.

August saw a near-record reduction in purchasing activity amid temporary company closures and low demand. Despite the drop-in purchasing, stocks of inputs increased for the first time in three months. The accumulation largely reflected the difficulties firms were having in maintaining production volumes.

Business sentiment hit a 15-month low in August as the severity of the current Covid-19 outbreak in Vietnam led to the anticipation by a number of firms of a sustained period of restrictions on their operations. That said, others were confident of a rebound in production.

Among a number of cities/provinces currently under the “stay-at-home” order, Hanoi’s index of industrial production (IIP) in August declined by 8% against the previous month.

Industrial production, however, remained positive for the eight-month period with an annualized growth rate of 6.3%.

During the eight-month period, manufacturing and processing, accounting for 96.5% of total production value in Hanoi’s industry sector, expanded by 6.3%; followed by production and distribution of electricity (7.1%); sewage treatment and water collection (6.3%); and mining industry (5.5%).

Subsectors that increased sharply due to growing demand during the eight-month period include motorized vehicle production (up 21.6% year-on-year); garment (18.2%); beverage (16.1%); wood and wooden products (10.9%); paper production (10.5%); and computers and optical products (8%).

 

Source: hanoitimes

2021 economic outlook remains positive despite COVID-19 resurgence

2021 economic outlook remains positive despite COVID-19 resurgence

Data shows that industrial production index in the first five months of the year advanced 9.9 percent year-on-year, with manufacturing and processing up 12.6 percent.

MORE NEWS

EuroCham Chairman praises strong and forward-looking government

Vietnam’s recovery has been ensured by strong and forward-looking government support which helped to bring in more high-profile FDI projects

Many firms suspend raising capital from stock market

Many enterprises have either stopped mobilizing capital or changed their capital-raising plans on the stock market amid existing uncertainties and disadvantages.

HCM City runs out of Covid-19 vaccines

HCM City has run out of Covid-19 vaccines over the past 10 days, said Nguyen Hong Tam, the deputy director of the municipal Centre for Disease Control and Prevention.

VIETNAM NEWS HEADLINES SEPTEMBER 30

Chinese police hand over wanted man to Lao Cai authorities

Foreign-invested enterprises face up to procedural barriers

Administrative procedures such as a prolonged timeline for obtaining business licences, as well as overlaps in the legal framework, are continuing to affect the expansion plans of many foreign-invested enterprises in Vietnam.

Reisereporter.de: Vietnam among ten attractive destinations to escape Europe’s winter

With its year-round warm tropical climate, breathtakingly beautiful scenery, and exciting culture, Vietnam is gradually becoming an attractive destination for German tourists.

VIETNAM BUSINESS NEWS SEPTEMBER 30

Real estate sector faces debt default risk

Shan Tuyet tea, valuable timber plants named ‘Vietnam Heritage Trees’

More than 1,300 Shan Tuyet tea plants in Ha Giang province and a group of valuable timber trees in Dak Nong province have been recognised as “Vietnam Heritage Trees”.

Fast fashion brands scale up for growth

Surviving and developing in a competitive fast fashion market remains a challenge for many brands, especially for newcomers.

Arguments arise as properties required to be traded on exchange

Controversy has arisen over the Ministry of Construction’s draft of the amended law on real estate trading as it requires real estate products to be traded on an official exchange.

Boeing accelerates cooperation with Vietnamese suppliers

Boeing, the world’s leading aerospace company based in the US, are accelerating cooperation with Vietnamese suppliers and universities to provide a foundation for long-term industrial growth.

Expecting coffee exports to hit a record $4 billion

Vietnam Coffee Cocoa Association (Vicofa) forecasted that if the export price of coffee remained at a high level, as in the first half of the year

Major investors worry as stock market weakens

The stock market boards have been covered with red amid investors’ rising caution. There are few buyers, while selling pressure still exists. Foreign investors’ behavior has affected the market.

Vietnam sees great potential in ASEAN halal market

Despite opportunities available in the ASEAN halal food market, Vietnamese exporters have to date exported only a small amount of halal products to some countries in the region.

Vietnam is becoming a beacon in the region: The Brussels Times

The Brussels Times of Belgium has run an article highlighting that Vietnam is becoming a beacon in the region with the capacity to control inflation and maintain economic growth at a high level despite turbulent international affairs.
back_to_top