• Vietnam's manufacturing sector shows recovery signs post-Typhoon Yagi, with a rise in output and new orders.
• The Purchasing Managers' Index (PMI) posted a score of 51.2 in October, indicating sector expansion.
• Despite challenges, new export orders increased, signaling a promising future for the industry.
• The sector's resilience and potential for further growth underscore the strength of Vietnam's manufacturing industry.

Vietnam's manufacturing sector, which was severely impacted by Typhoon Yagi, has shown signs of recovery in October, according to a report by S&P Global Market Intelligence. The report, released on Friday, indicates a resurgence in both output and new orders, signaling a positive shift in the country's manufacturing landscape.

The Purchasing Managers' Index (PMI), a key indicator of the economic health of the manufacturing sector, posted a score of 51.2 in October. This is a significant increase from the 47.3 recorded in September, and it surpasses the 50.0 no-change mark, indicating expansion in the sector. The rise in the PMI is a clear sign of recovery following the disruption caused by Typhoon Yagi in the previous month.

The report also highlighted an increase in new export orders in October, further underlining the sector's recovery. This rise in total new business is a promising sign for Vietnam's manufacturing industry, which has been grappling with the aftermath of the typhoon.

New Business and Export Orders on the Rise

Andrew Harker, economics director at S&P Global Market Intelligence, commented on the data, stating, October data showed that the recovery from the disruption caused by Typhoon Yagi got underway during the month, with firms seeing a rise in new orders and being able to expand their production. This statement underscores the resilience of the Vietnamese manufacturing sector and its ability to bounce back from natural disasters.

Harker further added, We should hopefully, therefore, see growth pick-up as more manufacturers get back up to full capacity towards the year-end. This prediction suggests a positive outlook for the sector, with the potential for further growth as more manufacturers regain their full operational capacity.

However, the recovery has not been without its challenges. Suppliers' delivery times lengthened for the second consecutive month in October due to the storm-triggered disruption continuing to affect transportation. Despite this, the extent of the delay was less severe than in September.

Challenges and Historical Resilience

Stocks of purchases continued to decline as inputs were used to support the growth of production. The rate of depletion was much weaker than the near-record seen in the previous survey period. Manufacturers reported a rise in input costs amid currency weakness and higher prices for oil, metals, and transportation. In response, firms increased their own selling prices. However, the rate of charge inflation was only slight, as some respondents indicated that competitive pressures had led them to offer discounts.

Historically, Vietnam's manufacturing sector has shown resilience in the face of natural disasters. For instance, in 2017, the sector rebounded quickly after Typhoon Damrey, one of the deadliest storms to hit the country in a decade. The quick recovery was attributed to the government's effective disaster management strategies and the resilience of the Vietnamese people.