Vietnam's manufacturing rebounds after Typhoon

Vietnam’s Manufacturing Purchasing Managers’ Index (PMI) posted 51.2 in October, up from 47.3 in September and back above the 50.0 no-change mark following the disruption caused to the sector by Typhoon Yagi in the previous month.  

According to the latest report released by S&P Global on November 1, the Vietnamese manufacturing sector has started to recover from the effects of September’s typhoon Yagi as it recorded renewed increases in both output and new orders.

However, some disruption to supply chains and production remains.

Business conditions have now been strengthened in six of the past seven months, although the improvement in October remained modest. Central to the renewed strengthening of the health of the sector were the returns to growth of both production and new orders as the recovery from the typhoon got underway.

Experts pointed out that in each case, rates of expansion were softer than in the months leading up to September as some firms continued to endure disruptions following the storm and subsequent flooding.

Alongside the rise in total new businesses, new export orders also increased in October. However, the rate of expansion was only marginal amid several reports of subdued international demand.

Manufacturers reported a rise in input costs amid currency weakness and higher prices for oil, metals and transportation. In turn, firms increased their own selling prices. However, the rate of charge inflation was only slight, as some respondents indicated that competitive pressures had led them to offer discounts.

Rising sales, hopes for stable market conditions, and business expansion plans all contributed to positive expectations regarding manufacturing production over the coming year. Optimism dipped to a nine-month low and was weaker than the series average. Some firms indicated that uncertainty around the US Presidential Election had dampened confidence, according to S&P Global.

Mr. Andrew Harker, Economics Director at S&P Global Market Intelligence, said “October data showed that the recovery from the disruption caused by Typhoon Yagi got underway during the month, with firms seeing a rise in new orders and being able to expand their production.”

“Some companies are still suffering from the effects of the storm, however, limiting rates of expansion. We should hopefully therefore see growth pick-up as more manufacturers get back up to full capacity towards the year end,” he added.