Vietnam PMI December 2024 – manufacturing purchasing managers index

Cimigo
Jan 02, 2025

New order growth slows to three-month low in December

  • Weaker rises in output and new orders.
  • Marked fall in business confidence.
  • Employment scaled back further.

Cimigo Vietnam market research has collected the Vietnam PMI – manufacturing purchasing managers index since 2013. S&P Global compiles the Vietnam PMI S&P Global from responses to monthly questionnaires sent to purchasing managers in a panel of around 400 manufacturers.

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Vietnam PMI findings

Vietnam PMI December 2024

The final month of 2024 saw a loss of momentum in the Vietnamese manufacturing sector. Growth of production and new orders slowed, while firms scaled back employment and inventories. There was a renewed increase in purchasing activity, however. Meanwhile, business confidence dropped to a 19-month low.

Inflationary pressures picked up, with both input costs and output prices rising at the fastest rates since July.

The S&P Global Vietnam Manufacturing Purchasing Managers’ Index™ (PMI®) dipped below the 50.0 no-change mark for the first time in three months during December, posting 49.8 from 50.8 in November. The reading signalled a fractional deterioration in overall business conditions at the end of the year. The worsening in the health of the sector was recorded in spite of increases in output and new orders, as firms scaled back their employment and stocks of purchases.

Although both output and new orders increased in December, rates of expansion were only slight and the weakest in the respective three-month growth sequences. Some firms signalled demand improvements, while others reported that market conditions had softened.

While total new business continued to rise, new export orders decreased for the second month running and at a solid pace. Concerns about global market instability and uncertainty caused a drop in confidence regarding the year-ahead outlook for production.

Sentiment fell markedly in December and was the lowest since May 2023. Hopes for increases in new orders, an improvement in economic conditions and the resolution of some of the conflicts around the world meant that firms were on balance optimistic that output will expand, however.

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Expected rises in output in the coming months led to a renewed increase in purchasing activity, with the rate of expansion the fastest in four months. Firms remained reluctant to hold excess inventories, however, and reduced stocks of purchases accordingly. Stocks of finished goods were also down.

Vietnam PMI Trend December 2024

Manufacturers reduced employment for the third successive month at the end of the year amid muted growth of new orders. Although modest, the pace of job cuts was the sharpest since August.

The continued scaling back of employment at a time when new orders were expanding (albeit slightly), meant that backlogs of work accumulated again in December, extending the current sequence of rising outstanding business to seven months. That said, the latest increase was only marginal and the weakest in this sequence.

Inflationary pressures picked up in December, with both input costs and output prices rising at sharper rates than in November. Material shortages and exchange rate fluctuations contributed to higher input costs, according to panellists, with oil and metals among the items mentioned as being up
in price.

In turn, companies increased their output prices for the eighth month in a row, and at a solid pace that was the fastest since July. The latest rise was also stronger than the series average.

Finally, suppliers’ delivery times lengthened for the fourth month running, with firms often noting slow traffic conditions. The lengthening of lead times was only modest, however, and the least pronounced in the current period of deteriorating vendor performance. 

Approach

The S&P Global Vietnam Manufacturing PMI® is compiled by S&P Global from responses to monthly questionnaires sent to purchasing managers in a panel of around 400 manufacturers. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP.

Survey responses are collected by Cimigo Vietnam in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses.

The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.

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