PMI Exceeds 51 Points

According to S&P Global, Vietnam's Manufacturing PMI surged to 51.2 in October, surpassing the 50-point threshold after disruptions caused by Typhoon Yagi in September 2024. Business conditions have now improved in six of the last seven months.

Typhoon Yagi in September severely impacted Vietnam's manufacturing sector. Heavy rains and flooding temporarily shut down businesses and caused delays across production lines and supply chains. Consequently, Vietnam’s PMI dropped from 52.4 in August to 47.3 in September.

By October, however, Vietnam's manufacturing sector began to recover as production and new orders rebounded. Growth in these indices was slower compared to the months before September, as some firms continued to experience post-storm disruptions.

While export orders saw a slight increase, international demand showed signs of weakening. Manufacturers relied on existing inventories to fulfill orders, leading to a reduction in finished goods stock. Meanwhile, the labor market showed signs of stabilization, with some companies implementing workforce reductions.

Many businesses increased their inventories to meet production needs, although the rate of inventory reduction slowed compared to the previous quarter. Additionally, rising costs of raw materials, fuel, and transportation prompted companies to raise product prices to offset expenses.

Supplier delivery times were extended for the second consecutive month in October as post-storm disruptions continued to affect logistics, albeit to a lesser extent than in September.

Purchasing activity picked up in response to rising new orders and anticipated production growth in the coming months.

According to S&P Global, while increased sales and expansion plans are fueling positive expectations for production in the coming year, global political uncertainties, particularly the upcoming U.S. elections, have tempered business confidence.