Manufacturing output slowed in November due to declining global demand.

Vietnam's manufacturing sector continued to grow in November 2024, but at a slower pace than the previous month, due to decreased global demand and a second consecutive month of job losses.

The number of new orders in November 2024 slowed down due to a decline in exports.

This is the content stated in the Purchasing Managers' Index (PMI) Report. Vietnam's manufacturing sector, according to the S&P Global PMI, was released on the morning of December 2nd.

The report indicates that output and new orders have slowed, with the number of orders being affected by weak export activity. Meanwhile, employment continues to decline in cost-cutting efforts, leading to a continued increase in outstanding work.

Input costs increased, but only modestly, leading to a slight rise in output prices. The manufacturing PMI remained above 50 points in November, indicating that business conditions improved for the second consecutive month after a decline caused by Typhoon Yagi in September.

However, the November figure of 50.8 points was still down from 51.2 points in October, meaning the manufacturing sector's "health" only improved modestly. Similar to overall business conditions, manufacturing output increased for the second consecutive month, but at a slower pace than in October.

As evidence, some businesses Production is increasing to meet rising new orders, but some businesses are reporting relatively weak demand, causing production growth to slow down.

"Although total new orders increased amid improving demand and the addition of new customers, weakness in international demand impacted overall growth," the report stated.

In fact, the number of new overseas orders has been declining steadily after a slight increase in the previous month, and exports have fallen at their sharpest rate since July 2023.

While output and new orders continued to rise, albeit at a slower pace, employment declined for the second consecutive month in November. This was partly due to businesses cutting jobs to reduce costs.

With reduced staffing, businesses are struggling to fulfill orders on time. As a result, the backlog of work has increased for the sixth consecutive month.

Manufacturers continue to face extended supplier delivery times in the middle of the final quarter of the year. Delivery times have been extended for the third consecutive month, and the extent of the delays is greater than in October.

Business confidence declined for the second consecutive month, with the drop being the smallest since January. However, manufacturers remain optimistic that output will increase over the next year, driven by expectations related to new product launches and business expansion, plus rising new orders.

Andrew Harker, Director Economy S&P Global Market Intelligence noted: "Vietnam's manufacturing sector grew in November, but the pace of output growth and new orders slowed. The slowdown reflects weakening international demand, with exports falling by the largest amount since July 2023."

In this context, businesses continue to control costs and cut jobs, thereby limiting their ability to fulfill orders on time.

"Hopefully, demand will strengthen in the coming months, which will give companies the confidence to increase capacity," said Andrew Harker.

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