April manufacturing PMI lowest in nine years

By Minh Son   May 5, 2020 | 06:35 pm PT
April manufacturing PMI lowest in nine years
An employee operates an agar manufacturing machine in the northern province of Bac Giang. Photo by Shutterstock/Bamboovn.
Vietnam’s Manufacturing Purchasing Managers’ Index (PMI) in April plunged to its lowest point in nine years, indicating a heavy blow to the manufacturing sector.

A recent report released by London-based global information provider IHS Markit said Vietnam’s PMI fell to 32.7 in April from 41.9 in March. Vietnam’s PMI had always higher than 40 since IHSMarkit began collecting market data in 2011, dropping below the mark for the first time in April this year.

The decline in PMI in April by itself signals an intensification of the downturn in the Vietnamese manufacturing sector as a result of the Covid-19 pandemic, according to a recent report by the London-based global information provider IHS Markit.

Business conditions have now worsened in each of the past three months, the report said.

In April, record falls were seen in output, new orders, employment and purchases amid company shutdowns and the cancellation of orders, with the impact of Covid-19 most keenly felt in steep falls in production and new orders, leading to some companies downing shutters.

The decline in overall new business in April reflected the effects of the virus in markets all around the world, the report said.

The lack of new orders and resultant lower workloads have led to reduced staffing levels, and some employees having resigned.

The rise in unemployment in this period is among the sharpest on record, and a new employment low was seen for the second month running.

Meanwhile, business sentiment regarding the outlook for the next 12 months turned negative for the first time since HIS Markit began collecting market data in 2011. Sentiment dropped amid fears that the impact of the Covid-19 pandemic could last for a prolonged period. Around 40 percent of respondents signaled a negative outlook in April, IHS Markit said.

"The latest Vietnam manufacturing PMI report highlights the devastating impact that the Covid-19 pandemic and efforts to restrict its spread have had on the Vietnamese manufacturing sector," said Andrew Harker, associate director at IHS Markit.

"Whether April proves to be the nadir of the downturn will depend on how firms and their customers respond to an easing of the lockdown and reopening of businesses that have been closed temporarily," he added.

Vietnam’s PMI ranked third in Southeast Asia after Thailand with 46.7 and Singapore with 33.3.

The PMI, indicating the health of its manufacturing sector, is a weighted average of five indices: new orders, output, employment, suppliers’ delivery times and stocks of purchases.

The index ranges between 0 and 100, with a reading above 50 indicating an overall expansion of the manufacturing sector compared to the previous month, below 50 represents a contraction, and 50 indicates no change.

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