Recent months have witnessed a precipitous decline in manufacturing sector business conditions.

DNHN - The report indicates that there was a decline in the volume of new orders received from Vietnamese manufacturers in November, which marked the conclusion of three months of growth.

According to a report by S&P Global, Vietnam's manufacturing PMI index decreased from 49.6 points in October to 47.3 points in November. This result indicates that manufacturing business conditions deteriorated significantly from the previous month, prolonging a three-month recession.

The report indicates that there was a decline in the volume of new orders received from Vietnamese manufacturers in November, which marked the conclusion of three months of growth. Since May, this rate of decline has been the most pronounced and substantial.

The report posits that the decline in new orders can be attributed to a reduction in customer demand. The initial decrease in new export orders after four months was also indicative of the decline in demand, especially from international buyers. Several respondents to the survey panel stated that customers were unwilling to pay premium prices for products.

Additionally, the decline in new orders may be a customer response to price increases, according to the report. Despite implementing a strategy of increasing selling prices for four consecutive months in response to the most significant surge in input costs since February, organizations continue to encounter mounting cost pressure.

As a result of the decline in new orders, output and backlogs continued to decline in November, which in turn reduced shopping and work activity. Despite a marginal decline in employment following a month-on-month increase in October, the labor force has been in a declining trend for the previous eight months.

Cost pressures persisted in their upward trajectory during the final quarter of 2023, coinciding with a nine-month peak in the inflation rate. One of the factors cited as contributing to the escalation of prices for imported commodities, particularly fuel, oil, and sugar, is the depreciation of the currency. Manufacturers persist in raising selling prices as a reaction to this circumstance, thereby presenting a challenge to the precarious business climate. Organizations also voiced apprehensions regarding the accumulation of inventory in the face of sluggish demand, which would result in diminished quantities of purchased and completed goods. Despite expectations for an increase in output in the coming year, business confidence has fallen below the historical average of the index. Businesses voiced apprehensions regarding their susceptibility to deteriorating market conditions and economic conditions.

P.V (t/h)