Manufacturing conditions worsen for July

July’s data was highlighted by a fall in the seasonally adjusted HSBC Vietnam Manufacturing (PMI) to 43.6, from 46.6 in June with overall business conditions

Accordingly, manufacturers  in  Vietnam  indicated  a  marked  reduction  in production  levels  during  July,  thereby  extending  the  current period of contraction to four months.

Latest data indicated that both output  and  new  business  levels  declined  at  the  fastest rates  since  the  survey  began  in  April,  2011.  

Anecdotal evidence widely pointed to unfavourable economic conditions and an unwillingness to spend.

The overall  drop  in  new  business  volumes  was  mainly  driven  by weaker  demand  from  domestic  clients,  as  new  export  orders continued to decline at only a modest pace.

Companies reporting a fall in new work received from abroad generally cited lower exports to China and softer demand from European markets.

Lower workloads allowed firms to focus on reducing their volumes of unfinished business in July. As a result, latest data pointed to a marked fall in backlogs of work, with the pace of decline the fastest in the 16-month survey history.

Meanwhile, Vietnam manufacturers trimmed their staffing levels, thereby extending the current period of workforce reduction to two months.

Survey respondents widely attributed the fall to reduced inflows of new work and an associated decrease in production requirements at their plants.

Vietnamese manufacturers cut back on their input buying for the fourth successive month in July.  The  latest  reduction  in purchasing activity was the sharpest since the survey began in April  2011,  which  in  turn  resulted  in  a  marked  fall  in  pre-production inventories.  

Lower demand for inputs contributed to another improvement in supplier delivery times during the latest survey period.