Companies still confiding about output growth despite a slide of the purchasing managers' index

The rate of improvement in Vietnamese manufacturing business conditions continued to soften in November. New order growth slowed, while production stagnated. The rate of job creation remained solid, however, companies were still confident regarding output growth over the coming year.

Meanwhile, there were reports of raw material supply shortages affecting operations. These contributed to longer delivery times for inputs and a reduction in stocks of purchases, while also being mentioned as a factor behind the lack of production growth.

The rate of new order growth eased for the second month running in November, with slower increases in both total and export orders. That said, new business has now risen on a monthly basis throughout the past two years.

While new orders continued to rise, the weaker expansion resulted in manufacturers holding production volumes broadly steady. The stagnation in output ended a 12-month sequence of growth.

“The final quarter of 2017 has been somewhat disappointing for the Vietnamese manufacturing sector so far. Manufacturers continued to increase staffing levels and purchasing activity at solid rates, however, suggesting that the current soft-patch is expected to be only temporary,” said Andrew Harker, Associate Director at IHS Markit, which compiles the survey.

A reading above 50 indicates economic expansion, while one below 50 points toward contraction.