Vietnam's manufacturing PMI in April increased from 49.9 in March to 50.3, showing that the health of Vietnam's manufacturing sector has improved slightly.

S&P Global's report assessed that the positive point of this survey was a strong recovery of the number of new orders, with the fastest growth rate since August 2022. Survey team members said market demand improved and they were successful in attracting new customers.

In addition, the number of new export orders in April 2024 also increased slightly again, but the increase was lower than the number of new orders. Moreover, according to S&P Global experts, another factor that also contributed to the increase in the number of new orders in April was the selling price of goods. Accordingly, the selling price of goods decreased for the second consecutive month amid competitive prices between businesses and discount requests from customers. 

Input costs continued to increase slightly in April due to rising oil, sugar, and transportation costs. Because the increase was relatively muted, companies can easily lower prices without putting too much pressure on profit margins. 

The report also said that the sharp increase in the number of new orders helped Vietnam's manufacturing output to increase slightly. Although the number of new orders and output increased in April, the current weak demand condition caused companies to reduce employment for the first time in three months.

However, S&P Global said that, at a time when the number of new orders increased again, the reduction in the number of employees made it difficult for companies to complete orders on time. As a result, the backlog increased slightly after 3 months. 

In addition, purchasing activities increased for the first time in the past 6 months to meet the number of new orders. However, the increase was still relatively mild because companies were hesitant to hold inventories. In fact, stocks of purchased goods decreased sharply again.

Stocks of finished goods also recorded a decrease, partly reflecting the need to meet the solid increase in the number of new orders at a time of still limited output. 

Suppliers' delivery times were unchanged in April, thereby ending a three-month sequence of lengthening delivery times. Some companies said suppliers' inventory helped them speed up deliveries.

Recent market instability caused business confidence to fall to a three-month low. However, hopes for stable and positive demand conditions in the coming months reinforced optimism that output will increase over the next year.

Assessing Vietnam's manufacturing sector in April, Mr. Andrew Harker, Economics Director at S&P Global Market Intelligence, said that the number of new orders in Vietnam's manufacturing sector increased again in an encouraging way in April after recent weakness. There were also some signs that the level of recovery may have surprised companies because they decided to lay off workers after a period of reduced production demand, thereby increasing the backlog of work.

“More generally, the recent up and down nature of new order inflows was a concern for firms looking forward. We will hopefully see a more stable environment in the months ahead, helping manufacturers to plan production and resourcing effectively." he said.