VINACHEM

The Vietnamese manufacturing sector started to recover from the effects of Typhoon Yagi with renewed increases in both output and new orders in October, according to the S&P Global Vietnam Manufacturing Purchasing Managers’ Index (PMI) report released on November 1.

PMI posted 51.2 in October, up from 47.3 in September and back above the 50 no-change mark following the disruption caused to the sector by Typhoon Yagi.

Recovery from the impact of Typhoon Yagi gets underway but some of the impacts of the storm and flooding lingered into October, limiting output growth and causing supplier delivery delays plus a build-up of outstanding business.

Both production and new orders return to growth. However, the rates of expansion were softer than in the months leading up to September as some firms continued to face disruption following the storm and associated flooding, the report stated.

New export orders also increased in October, but the rate of expansion was only marginal amid some reports of subdued international demand.

Manufacturers also reported a rise in input costs amid currency weakness and higher prices for oil, metals and transportation.

There are positive expectations regarding manufacturing production in the coming year, fueled by rising sales, hopes for stable market conditions and business expansion plans. However, optimism dipped to a nine-month low and was weaker than the series average as some firms indicated that uncertainty around the US presidential election had dampened confidence.

"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,” said Andrew Harker, Economics Director at S&P Global Market Intelligence.

“We should hopefully therefore see growth pick up as more manufacturers get back up to full capacity towards the year end." — VNS