AsemconnectVietnam - Typhoon Yagi hit Vietnam's manufacturing sector hard in September of 2024, leading to temporary business closures and delays in production lines and supply chains.

This led to a decline in output, new orders, purchasing activity and inventories of input goods.
On October 1, S&P Global announced that the S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) fell below 50 points in September of 2024, signaling deterioration in business conditions at the end of the third quarter of the year after a period of strong growth. The index fell to 47.3 from 52.4 in August, indicating the most significant deterioration in the health of the manufacturing sector since November of 2023.
Typhoon Yagi caused a sharp decline in manufacturing output in September, ending a five-month period of expansion. After a sharp increase in output in August, the decline in this survey was the most significant since January of 2023.
New orders also fell at a similar rate, also attributed to the impact of the typhoon. However, the decline was only marginal and much weaker than the rate of decline in total new orders as international demand picked up relatively well.
With output and new orders falling, firms scaled back their purchasing activities for the first time in six months.
Manufacturers who purchased goods during the month experienced significant lengthening of supplier delivery times as flooding disrupted transport. As a result, inventories of purchases fell rapidly. Moreover, the decline was the second-largest in the index’s history, only surpassed by April of 2020, a month affected by the pandemic. Finished goods inventories also fell in September.
However, with the disruption caused by Typhoon Yagi expected to be temporary, manufacturers remained optimistic that output would increase next year. In fact, business sentiment rose to a three-month high as firms were confident that demand would strengthen.
The positive expectations and the significant increase in new orders in previous months led manufacturers to increase their staffing levels slightly in September after a decline in the previous month.
Despite rising input costs amid rising raw material prices and rising transportation costs, inflation has eased to a relatively modest level.
A similar situation was observed with selling prices. Some companies raised prices to cope with higher input costs, but others took advantage of the weaker increase in costs to pass on discounts to customers.
Andrew Harker, Chief Economist at S&P Global Market Intelligence, assessed that the severity of Typhoon Yagi had a major impact on Vietnam's manufacturing sector as heavy rains and flooding caused temporary business closures and delays in both supply chains and production lines. The storm put an end to a period of strong growth in the manufacturing sector.
“However, demand conditions will remain favorable for growth, which means we could see a rapid rebound in the sector as the post-typhoon recovery period begins. As a result, companies remain optimistic about the outlook for next year and have increased employment even as workloads have fallen,” said Andrew Harker.
CK
Source: VITIC/ haiquanonline.com.vn