Vietnam's manufacturing rebounds as virus fears ease

JAKARTA, Indonesia

Vietnam's manufacturing sector returned to growth in September as concerns around the coronavirus pandemic in the country eased, said a local media report on Wednesday.

Both output and new orders increased, business confidence strengthened, and the rate of job cuts declined, daily Viet Nam News reported.

According to a monthly survey by Nikkei and IHS Markit, Vietnam’s Manufacturing Purchasing Index (PMI) rose back above the 50.0 no-change mark in September, reaching 52.2 from 45.7 in August, the report said.

“That pointed to the first improvement in business conditions for three months, and the most marked since July 2019,” it said.

Control over the COVID-19 pandemic was a key factor behind improvements in operating conditions, after rising case numbers had been seen in the previous survey period, the report added.

Falling case numbers contributed to stronger client demand and led to a solid increase in new orders, with new business from abroad up for the first time since January.

Vietnam has reported a total of 1,098 cases of COVID-19 to date, including 1,023 recoveries and five deaths.

According to the report, business confidence also improved at the end of the third quarter of the year, rising sharply from August to the highest since July 2019.

Projected growth of new orders is expected to lead to increase in output over the coming year, but a number of firms mentioned that positive expectations were based on assumptions that the pandemic will remain under control in the country, it said.

Rising new orders have encouraged manufacturers to expand their purchasing activity for the first time in three months, that too at a solid pace, the report added.

Andrew Harker, economics director at IHS Markit, said a spike in COVID-19 cases in late July and early August briefly threw the sector’s recovery off track in August, but the September PMI results were much more positive.

“With control of the pandemic regained, firms saw an influx of new orders, ramped up production and were at their most optimistic for over a year. As ever though, sustaining these positive trends is dependent on virus cases not picking up again,” the report quoted Harker as saying.

He added that one new development in the latest survey was a return to growth of new export orders for the first time since the pandemic started, a welcome signal that international demand is becoming more supportive of the sector’s recovery.