The manufacturing sector saw output and new orders decrease again but at slower rates in January, S&P Global said.
It said in a release: “There were some signs of improvement, particularly with regard to new export orders which rose for the first time in three months. As such, total new business fell at a modest pace that was the softest in the current period of decline.”
The S&P Global Vietnam Manufacturing Purchasing Managers’ Index rose to 47.4 in January from 46.4 the previous month, but it still represented a solid deterioration in the health of the manufacturing sector.
A PMI reading of above 50 indicates an expansion of the manufacturing sector compared to the previous month, while one below 50 represents a contraction.
Operating conditions have now worsened in each of the past three months.
Faster increases in input costs led manufacturers to raise their selling prices in January. Though modest, it was the steepest hike in six months.
The rising cost of raw materials meant some firms reduced their purchasing activity again in January.
But some signs of improvement in demand encouraged others to increase so that purchasing activity was broadly unchanged overall.
Suppliers’ delivery times shortened marginally from the two preceding months.
Business confidence improved to a three-month high amid hopes that demand conditions will strengthen over the course of the year, feeding through to growth of output.
The relaxation of Covid pandemic restrictions in mainland China was another factor behind the positive outlook, according to the release.
More than half of respondents were optimistic that production will rise over the next 12 months.
Andrew Harker, economics director at S&P Global Market Intelligence, said the loosening of Covid-19 restrictions in China, along with signs that downturns in Europe and the U.S. may be less severe than feared, provided optimism that growth in Vietnam could be around the corner.
“S&P Global Market Intelligence is forecasting a rise in industrial production of 6.6% in 2023.”
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