Vietnam Manufacturing Purchasing Managers' Index (PMI) reached 48.9 points in January 2025.
On the morning of February 3, 2025, S&P Global released the Vietnam Manufacturing Purchasing Managers' Index (PMI) report for January 2025. There were 3 highlights: Output and new orders fell again; selling prices fell for the first time in 9 months and employment fell at the fastest rate since May 2024.
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New orders fell for the first time in four months
According to the S&P Global report, business conditions in Vietnam’s manufacturing sector deteriorated in the first month of 2025 amid a return to declines in both output and new orders. Firms responded to the reduced workload by cutting jobs and reducing inventories of both purchased goods and finished goods. Meanwhile, the rate of increase in input costs slowed, giving firms room to cut prices in an effort to stimulate demand.
The Vietnam Manufacturing PMI posted 48.9 in January 2025, down from 49.8 in December 2024 and below the 50-point threshold for the second consecutive month. The deterioration in operating conditions was moderate, but slightly more marked than in the previous survey.
New orders fell for the first time in four months in January as survey panelists reported weaker client demand. The fall in total new orders partly reflected a decline in new export orders, which fell for the third month in a row.
“ The fall in new orders led to a decline in output, the first in four months. However, as in the case of new orders, the rate of decline was only marginal ,” the report assessed; adding that the fall in new orders meant that there was some spare capacity in Vietnam’s manufacturing sector. As a result, firms were able to clear backlogs of work for the first time in eight months.
Expect a recovery
Companies continued to face delays in purchasing raw materials, as supplier delivery times lengthened for the fifth straight month, S&P Global reported. Survey panelists cited shipping delays and rising transportation costs as the reasons for the lengthening delivery times.
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| Vietnam's Manufacturing Purchasing Managers' Index (PMI) reached 48.9 points in January 2025. Photo: TT |
“Vietnamese manufacturers were reluctant to hold inventories at the start of the year, with both purchases and finished goods inventories falling sharply. In particular, the pace of decline in post-production inventories was the fastest since July last year and one of the most significant declines on record,” the report assessed.
The rate of input cost inflation slowed in January, the weakest in the current 18-month run of input price increases. It was also below the historical average. Where input costs rose, this was due to higher raw material and transport costs.
Slowing cost increases have allowed manufacturers to cut prices in an effort to shore up weak demand. Output prices fell for the first time in nine months, although the fall was modest.
Firms remained upbeat about output next year as business sentiment recovered from a 19-month low recorded in December. More than 36% of survey respondents expected output to increase over the next 12 months, on hopes of a recovery in market demand.
Commenting on the survey results, Mr. Andrew Harker, Chief Economist at S&P Global Market Intelligence, said that Vietnamese manufacturers had a poor start to 2025, with weak demand leading to further declines in new orders and output and more significant job cuts.
However, the price situation has eased somewhat as the pace of cost increases has slowed, allowing companies to cut prices to boost demand. Manufacturers are hopeful that the situation will improve soon, and they are at least more optimistic than they were at the end of 2024. S&P Global Market Intelligence forecasts industrial output to grow 4.6% in 2025.
Source: https://congthuong.vn/3-diem-noi-bat-cua-nganh-san-xuat-viet-nam-trong-thang-12025-la-gi-372022.html
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