Vietnam suffers unprecedented supply chain disruptions

The Vietnam Manufacturing Purchasing Managers’ Index (PMI) fell to 40.2 in August, down from 45.1 in July, signaling the worst deterioration in the health of the manufacturing sector since April 2020, according to a report of the UK-based information provider IHS Markit.

The current situation, compounded by raw material shortages, caused input costs to rise sharply, said the report.

A PMI reading above 50 indicates expansion in the manufacturing sector compared to the previous month while 50 indicates no change."Vietnamese manufacturers are facing a near-impossible task at present as the restrictions put in place to try and contain the spread of the COVID-19 outbreak in the country constrain their ability to produce goods," said Andrew Harker, economics director at IHS Markit.

According to HIS Markit studies, the severe supply chain disruptions have seen vendor delivery times lengthening sharply. Transportation problems have been reported, with congestion at ports unable to operate at full capacity.

Despite the drop in purchasing, stocks of inputs increased for the first time in three months. The accumulation largely reflected the difficulties firms were having in maintaining production volumes, the report said.