Vietnam's manufacturers optimistic about production rise in 12 months

New export business rose solidly and at a faster pace than total new orders, it showed. New orders increased for the tenth month running, but the rate of expansion eased to its weakest point since April. This encouraged manufacturers to keep expanding production in July.

Though output increased for the fourth successive month, the rate of expansion was only marginal and the softest in the current growth sequence amidst signs of lower demand, shipping difficulties and pricing pressure, according to a report in a Vietnamese media outlet.

There were signs, however, of price and supply pressures easing at the start of the third quarter.

The rate of input cost inflation slowed sharply and was the weakest since October 2020 as the prices of some inputs fell on global markets. The latest rise was still above the series average due to higher costs for oil, gas, and freight. Output prices too continued to rise, but the rate of inflation slowed and was only modest.

“The recent burst of growth in the Vietnamese manufacturing sector gave way to a more modest expansion in July, but firms were still able to secure greater volumes of new orders and increase output and employment accordingly," economics director at S&P Global Market Intelligence Andrew Harker said.

"Although there were some signs of demand softening, there were pleasing developments in terms of price and supply pressures. The rate of input cost inflation slowed sharply, while supply chains neared stabilisation. With these factors having provided serious headwinds for firms over a sustained period, signs of improvement should hopefully boost growth prospects," he added.

Suppliers' delivery times neared stabilisation as the rate of lead time lengthening reduced for the second month running to reach its weakest point in 22 months. Where delays continued, they were linked to issues with shipping and rising transportation costs.

Finished goods stocks decreased as well, falling for the fifth month running and at a faster pace than in June. Some firms lowered inventories in response to slower new order growth, while others found it easier to dispatch products for export.

Fibre2Fashion News Desk (DS)