July manufacturing activity posts softest fall in 5 months

The country’s Purchasing Managers’ Index rose from 46.2 in June to 48.7 in July, the fifth successive monthly deterioration in operating conditions, the market research company said in a report.

But new orders and employment either the weakest or joint-weakest in the respective sequences of reduction which stretch back to March in all cases, it said.

Manufacturers signalled that demand remained subdued overall, particularly in export markets. New export orders fell much more quickly than total new business. Some firms pointed to declines in new orders from European customers.

With new orders still declining, firms scaled back production again in July, although the alleviation of the problem of power outages which were prevalent in June contributed to the pace of contraction softening since the previous survey period.

"The Vietnamese manufacturing sector remained under pressure in July, according to the latest data, with firms again struggling to secure new business and scaling back output accordingly," said Andrew Harker, economics director at S&P Global Market Intelligence.

But there were signs that demand may be stabilizing as new orders fell at the softest pace in five months. Firms will be hoping that this may feed through to renewed growth of orders in the months ahead, he added.

In the first seven months Vietnam’s Index of Industrial Production (IIP) fell 0.7% year-on-year, according to the General Statistics Office.

The biggest IIP decline was seen in several northern provinces, including Bac Ninh, where many industrial parks are located.