Việt Nam’s manufacturing drops to record low in March due to pandemic

The COVID-19 pandemic had a negative impact on the Vietnamese manufacturing sector during March. Photo ndh.vn

The COVID-19 pandemic had a negative impact on the Vietnamese manufacturing sector during March, according to the survey.

Business conditions deteriorated to the greatest extent since the survey began in March 2011 amid record falls in output, new orders and employment.

Firms also scaled back purchasing activity and inventory holdings, while severe disruption to supply chains was reported. Meanwhile, business confidence also hit a new low.

The latest PMI survey data signalled a steep decline in the health of the manufacturing sector, and one that was the most marked in more than nine years of data collection. The deterioration surpassed the previous record seen in July 2012.

“Unsurprisingly, the COVID-19 pandemic had a severe impact on the Vietnamese manufacturing sector in March, with PMI data signalling the worst decline in business conditions since the survey began just over nine years ago. Many of the survey's variables hit record lows and business confidence tumbled. The key now is how long it will take before the global community can bring the pandemic under control. Once this occurs, manufacturers predict a rebound in production,” said Andrew Harker, Economics Director at IHS Markit.

The COVID-19 pandemic led to substantial declines in both new orders and production during March. Both fell at the sharpest rates in the survey's history, with total new business decreasing at a broadly similar pace to new export orders.

According to the survey, around 42 per cent of respondents saw manufacturing production fall at the end of the first quarter. Steep reductions were registered across each of the consumer, intermediate and investment goods sectors.

A severe drop in new orders as a result of COVID-19 led firms to lower their staffing levels. Employment fell markedly, and for the second month running. Despite job cuts, firms were still able to reduce their backlog of work given the extent of the decline in new business.

Manufacturers also looked to reduce their purchasing activity during March, with input buying down at a record pace. An unprecedented fall in stocks of purchases was signalled as a result.