Latest Covid wave slows manufacturing growth

By Dat Nguyen   May 31, 2021 | 08:45 pm PT
Latest Covid wave slows manufacturing growth
A welder works in a factory in the northern province of Hai Duong. Photo by Shutterstock/thi.
Vietnam’s manufacturing index declined by 1.6 points in May as the latest wave of Covid-19 affected output and demand.

The Vietnam Manufacturing Purchasing Managers’ Index was at 53.1, down from 54.7 in April, according to a report by market research company IHS Markit.

A reading above 50 indicates expansion of the manufacturing sector, but there are signs the latest Covid outbreak impeded growth in May, the report said.

Rates of expansion in output, new orders and employment all softened, and firms signaled difficulties in completing orders and securing materials, it added.

IHS Markit said staff shortages contributed to a near-record rise in the work backlog as firms struggled to cope with inflows of new orders.

Operations were also hampered by a marked lengthening of suppliers’ delivery times, the greatest in just over a year, it added.

Firms expanded purchases to build reserves, but the increase was slower than in April, it said.

Business sentiment eased to a three-month low on worries about the Covid-19 outbreak, but firms remained optimistic overall that output would increase over the coming year, it added.

Controlling Covid spread in industrial parks while keeping the supply chain uninterrupted are now the government’s top priorities.

Outbreak epicenter Bac Giang has given the green light to 10 companies with more than 4,000 employees to resume operations after suspending them for almost half a month. The province has 395 companies operating in its industrial parks.

In the south, Ho Chi Minh City is scrambling to test hundreds of workers at two of its 17 industrial parks after two cases of Covid were found there.

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