November manufacturing growth slows as global demand falls

Vietnam's manufacturing sector continued to grow in November 2024 but at a slower pace than the previous month, due to weaker global demand, while employment also fell for the second consecutive month.

New order growth slowed in November 2024 due to a decline in exports.

This is the content stated in the Purchasing Managers' Index (PMI) Report Vietnam's manufacturing industry by S&P Global PMI, announced on the morning of December 2.

The report showed that output and new orders grew more slowly, with orders affected by weakness in exports. Meanwhile, employment continued to fall amid cost-cutting efforts, leading to a further increase in outstanding business.

Input costs rose, but only modestly, leading to a slight increase in output prices. The manufacturing PMI remained above the 50-point mark in November, indicating an improvement in business conditions for the second consecutive month after a decline due to Typhoon Yagi in September.

However, November's reading of 50.8 was still down from October's 51.2, meaning the health of the manufacturing sector improved only modestly. Like overall business conditions, manufacturing output rose for the second month in a row, but at a slower pace than in October.

Evidence, some business increased production to meet rising new orders, but some firms reported relatively weak demand, causing output growth to slow.

“Although total new orders increased amid improving demand and new customer acquisitions, weakness in international demand weighed on overall growth,” the report said.

In fact, new orders from abroad fell for a second straight month after rising slightly in the previous month, and export activity fell at its sharpest pace since July 2023.

While output and new orders continued to rise, albeit at a weaker pace, employment fell for the second consecutive month in November. There were cases of businesses cutting jobs to cut costs.

With fewer employees, businesses are having trouble fulfilling orders on time. As a result, backlogs of work have increased for the sixth consecutive month.

Manufacturers continued to face lengthening supplier delivery times in the middle of the final quarter of the year. Delivery times lengthened for the third consecutive month, and the extent of the lengthening was greater than in October.

Business confidence fell for the second consecutive month, and the decline was the lowest since January. However, manufacturers remained optimistic that output would increase next year, with expectations linked to new product launches and business expansion plans, plus rising new orders.

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

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

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

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