Vietnam's factory activity slows in August

September 2, 2020

Vietnam Purchasing Managers' Index (PMI), which measures the economic health of the country's manufacturing sector, fell to 45.7 in August from 47.6 in July, a report compiled by the London-based global information provider IHS Markit revealed on Tuesday.

This represented a deterioration in the health of the manufacturing sector for two consecutive months, after a return to growth had been signaled in June, said the report.

Respondents indicated that the effects of the COVID-19 pandemic led to declines in both output and new orders. New business decreased at a solid pace amid reports of weak customer demand. Data also pointed to a sharp reduction in new export orders, which was faster than that seen for total new business.

Concerns around the ongoing effects of COVID-19 on demand led to a drop in confidence among manufacturers regarding the 12-month outlook for production. Firms still predicted, on balance, that output will rise over the coming year, linked to hopes that the pandemic will be brought under control, read the report.

"Customer demand remained weak, with firms scaling back production accordingly. The picture around employment was particularly worrying, with jobs lost at the second fastest pace in nine-and-a-half years of data collection," Andrew Harker, economics director at IHS Markit commented on the survey results.

A PMI reading above 50 indicates an expansion of the manufacturing sector compared to the previous month; below 50 represents a contraction; while 50 indicates no change.