Storms and flooding disrupted Vietnamese factory activities in November, causing a slight output decrease, a report compiled by the London-based global information provider IHS Markit revealed Tuesday.
The Vietnam Purchasing Managers' Index (PMI), which measures the economic health of the country's manufacturing sector, dipped to 49.9 in November, ending a two-month sequence of growth. This followed a reading of 51.8 in October and was the first sub-50 figure in three months, according to the report.
Anecdotal evidence suggested that the reduction could be temporary as a number of firms indicated that recent stormy weather and subsequent flooding had disrupted their production during the month. The COVID-19 pandemic was also a factor weighing on the output.
New orders continued to rise, but only fractionally as business was impacted. On the other hand, a number of respondents indicated that new orders had increased amid improving underlying demand.
Apart from hampering production, the stormy weather and COVID-19 pandemic also disrupted the delivery of purchased items to manufacturers. Shortages of raw materials contributed to rises in input costs during November, with difficulties importing items and higher prices in international markets also cited.
Despite the setback in November, firms expect production to expand over the coming year. Confidence was centered on expectations that the COVID-19 pandemic would remain under control in Vietnam and cause less disruption globally.
"In fact, business confidence improved to the highest since July 2019 on expectations that the COVID-19 pandemic will be less disruptive in 2021," Andrew Harker, economics director at IHS Markit, commented on the survey results, adding that "we could therefore still be on track for a positive end to the year".
A PMI reading above 50 indicates an expansion of the manufacturing sector compared to the previous month; below 50 represents a contraction; while 50 indicates no change.