A different perspective on Vietnam’s economy and doing business in Vietnam. Make sure to  subscribe.

Vietnam Purchasing Managers’ Index down January over December

The S&P Global Vietnam Manufacturing Purchasing Managers’ Index recorded a fall in January over December, from 49.8 points to 48.9 points, according to a press release from the firm. Notably the last week of January was the Lunar New Year break which typically sees production fall in which case this drop should not be particularly concerning.

Key points of note:

  • New orders in January decreased for the first time in four months due to subdued demand.
  • New export orders also declined for the third consecutive month.
  • Firms had spare capacity and reduced backlogs for the first time in eight months.
  • Employment levels continued to decrease for the fourth consecutive month, with job shedding at its highest since May.
  • Purchasing activity increased slightly as firms sought to secure inputs.
  • Supplier delivery times lengthened for the fifth month due to slow transportation and higher shipping costs.
  • Inventories of purchases and finished goods decreased, with the drop in finished goods being the largest since July.
  • Input cost inflation slowed, providing room for firms to lower selling prices.
  • Output prices decreased for the first time in nine months, albeit marginally.
  • Manufacturers maintained an optimistic outlook for the year, with over 36 percent expecting production growth.

The S&P Global Vietnam Purchasing Managers’ Index is a key economic indicator that reflects the performance and health of Vietnam’s manufacturing sector. The PMI is derived from monthly surveys of private sector companies, covering various aspects of the manufacturing process, such as new orders, production, employment, supplier delivery times, and inventory levels.

The PMI is an index number ranging from 0 to 100. A PMI above 50 indicates expansion in the manufacturing sector compared to the previous month, while a reading below 50 suggests contraction. A reading of 50 indicates no change. The PMI is based on responses from purchasing managers in a panel of around 400 manufacturing companies in Vietnam. These managers are asked about various aspects of their operations compared to the previous month.

See also: Manufacturing in Vietnam: Ultimate Guide

Get Vietnam manufacturing news sent straight to your inbox