HANOI, Jun 1 (NNN-VNA) – The decline in Vietnam’s manufacturing activity in May was sharper than the previous month, due to a deepening slump in new orders, that darkens outlook for the export-driven economy, according to a report released by S&P Global Market Intelligence, today.
The S&P Global Vietnam Manufacturing Purchasing Managers’ Index (PMI), fell to 45.3 in May, from the previous month’s reading at 46.7, well below the 50.0 threshold that separates expansion from contraction, in manufacturing activity. It marked a third straight month of declines and the fastest pace since Sept, 2021, the report found.
The fall was driven mainly by the steepest decline in new orders in 20 months. Companies were reported to find it difficult to secure export orders, as new business from overseas markets shrank, for the third month in a row, said the report.
“The steepening decline in new orders during May is a cause for concern, as it suggests that the Vietnamese manufacturing sector may be in for a lengthy downturn, rather than a transitory soft patch,” said Andrew Harker, Economics Director at S&P Global Market Intelligence, which compiles the report.
The decline in new orders led to reduced factory output, midway through the second quarter of the year. Production fell for the third straight month, and at the fastest pace since Jan.
In response to lower output, firms scaled back both employment and input purchasing activity, Harker added.
Input costs decreased for the first time in three years, as a result of a slight easing in inflationary pressures and waning demand, the report revealed.
The PMI index measures the activity level of purchasing managers, in the manufacturing sector. A reading above 50 indicates expansion on a monthly basis in the sector, a reading below implies contraction.– NNN-VNA
