Illustrative photo (Photo: VNA) S&P Global reported that manufacturers faced a renewedreduction in new orders during November, thereby ending a three-month sequenceof growth. The pace of decline was the highest since May 2023.
It said that weaker customer demand was reportedly behindthe fall in new orders. Waning demand extended to international customers asnew export orders decreased for the first time in four months. With new orders falling and economic conditions challenging, firmsscaled back production again. Output has now decreased in each of the pastthree months. Moreover, the rate of contraction accelerated sharply and was themost pronounced since May, according to the report.
It said that cost pressures picked up again midway throughthe final quarter of the year. In turn, firms raised their own selling prices for the fourth successivemonth.
Falling new orders, reduced production requirements and afurther drop in backlogs of work meant that manufacturers looked to scale backtheir purchasing activity and employment in November.
Staffing levels decreased modestly following a fractionalimprovement in October, with workforce numbers having now been reduced in eightof the past nine months. Meanwhile, a slight fall in purchasing activity endeda three-month period during which input buying had been growing solidly.
Firms also expressed a reluctance to hold inventories amiddemand weakness.
Although firms expect output to rise over the coming yearamid hopes for an improvement in new orders, business confidence dipped for thesecond consecutive month and was below the series average. Firms expressedworries about the fragility of economic conditions and international demandweakness, according to S&P Global.
Andrew Harker, Economics Director at S&P Global MarketIntelligence, held that demand weakness, both domestically and in internationalmarkets, led to retrenchment across the Vietnamese manufacturing sector inNovember. With new orders down, firms scaled back their production, employmentand purchasing activity, plus limited inventory holdings.
The renewed fall in new orders was in part attributed tosome resistance among customers to price rises. With firms' own input costsincreasing to the largest extent since February, it may prove challenging formanufacturers to price competitively in the months ahead, he said, adding thatthe sector therefore looks set to head into 2024 in pretty subdued fashion, hopingfor a pick-up in demand conditions to occur soon./.
VNA
