Vietnam PMI Trends July 2023

The S&P Global Vietnam Manufacturing PMI exhibited an improvement, reaching a reading of 48.7 in July 2023 compared to the previous month's figure of 46.2. This represents the highest reading recorded since February. However, it's important to note that this latest reading continues a trend of decline in the manufacturing sector for the fifth consecutive month. This downward trend can be attributed to ongoing challenges faced by companies in securing new orders, leading to a reduction in output to match the subdued demand.

Simultaneously, foreign sales experienced a more pronounced decrease, indicating an acceleration in the decline. The labor market also felt the strain, with employment shrinking for the fifth successive month. Furthermore, purchasing activity remained subdued, marking the fifth successive decline in this aspect. Despite this, there was a notable development in the form of the first increase in stocks of finished goods. However, this positive change stemmed from difficulties in selling products rather than an uptick in demand.

Delivery times saw a further reduction, which can be attributed to a decrease in shipping disruptions. On the cost front, input prices decreased for the third consecutive month due to suppliers offering discounts. This, in turn, prompted manufacturers to implement cuts in selling prices. These reductions were more significant compared to the adjustments seen in input costs, reflecting a strategic move to stimulate demand.

Looking into the future, business confidence experienced a boost, reaching a four-month peak. This increase in confidence is linked to the optimistic outlook that a recovery in demand will eventually translate into a revival in production growth. Despite the challenges and setbacks faced by the manufacturing sector in recent months, there is a growing anticipation that improved demand dynamics will pave the way for more positive trends in the coming months.