Manufacturing Slows in Vietnam, Singapore

Posted on September 4, 2012

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Adding to a broader slowdown in China and elsewhere in Asia, manufacturing activity in Vietnam continued to contract in August—though at the slowest rate in four months—while Singapore’s manufacturing activity contracted further as new orders slowed.

Singapore’s purchasing managers index was 49.1 in August, compared with 49.8 in July, according to figures released Tuesday by the Singapore Institute of Purchasing & Materials Management. HSBC’s PMI for Vietnam rose to 47.9 in August from July’s 43.6. A figure below 50 indicates a contraction, while one above 50 indicates expansion.

“While business conditions in Vietnam remain challenging, the slowdown of the rate of manufacturing deterioration suggests that economic activities will likely gradually recover” in the fourth quarter, HSBC Asia economist Trinh Nguyen said.

The data come after a slew of PMI readings released Monday showed manufacturing slowing across Asia, showing the burden of continued lackluster demand from key export markets in the U.S. and Europe. China’s manufacturing sector recorded its weakest month since March 2009, HSBC’s PMI estimate for August showed, and only Indonesia showed faster manufacturing growth than the month before.

Mr. Nguyen said Vietnam’s gross domestic product growth would likely slow to 5.1% this year from 5.9% last year, but rising inflation would prevent the central bank from cutting interest rates to stimulate the economy, which may mean it will turn to alternative measures to encourage spending.

In Singapore, the purchasing managers’ institute attributed the contraction in the overall PMI to a decline in new orders and a first-time reduction in inventories of finished goods and imports.

One bright spot in August for Singapore was the electronics sector. PMI for the sector improved to 50.7 from 49.2 in July as new export orders and production output grew, according to the institute.

Michael S. Arnold

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Posted in: Business, Economy