Input cost inflation reaches 6-month high in Vietnam's manufacturing sector | Manufacturing Asia
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Input cost inflation reaches 6-month high in Vietnam's manufacturing sector

This adds to the sector's challenging business conditions, said S&P Global.

The beginning of 2023 was challenging for the Vietnamese manufacturing sector, with production, new orders, and employment declining, S&P Global revealed in its report.

Total new orders were down for the third month running in January, but new export orders rose for the first time in three months. Backlogs of work decreased in January, after having risen in December, and stocks of finished goods fell to the greatest extent since June 2021.

The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) posted 47.4 in January, up from 46.4 in December but still pointing to a solid monthly deterioration in the health of the manufacturing sector.

The rate of input cost inflation also accelerated for the fifth successive month in January to the fastest since last July. Firms increased their own selling prices for the first time in three months, with selling prices up modestly, and the pace of increase was the fastest in six months.

However, there were some signs of improvement in demand.

“One of the main positives in January was a renewed expansion in new export orders, with the decline in total new business softening as a result,” S&P Global Market Intelligence Economics Director Andrew Harker said.

Despite the challenging conditions, business confidence improved to a three-month high amidst hopes that demand conditions will strengthen over the course of the year, feeding through to the growth of output. 

S&P Global Market Intelligence is forecasting a rise in industrial production of 6.6% in 2023.

“The loosening of COVID-19 restrictions in Mainland China, plus signs that downturns in Europe and the US may be less severe than feared, provided optimism that growth in Vietnam could be around the corner,"  Harker commented.

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