The PMI moved back above the 50.0 mark for the first time in six months during August. At 50.5, the index was up from 48.7 in July and pointed to a marginal monthly improvement in business conditions in the sector.

Firms expanded their purchasing activity accordingly, but employment continued to fall marginally as firms were reluctant to take on extra staff given still fragile demand.

Renewed increases in prices were also recorded midway through the third quarter. Input costs rose for the first time in four months, while selling price inflation was signaled for the first time since March.

According to S&P Global, the nascent recovery in the health of the sector reflected tentative signs of demand improving.

Manufacturers recorded a first increase in new orders for six months, while new export business also rose following a five-month sequence of decline. Growth rates were modest, however, amid some reports of ongoing demand fragility.

Similarly, manufacturing production returned to growth in August, ending a five-month period of falling output. However, the rate of increase was only marginal.

Recoveries in output and new orders were most keenly felt in the investment goods category.

Firms responded to higher new orders and greater output requirements by expanding their purchasing activity at a solid pace. The rise was the first in six months and most pronounced since last September. In turn, stocks of purchases also increased, the second month running in which this has been the case.

The picture for employment was less positive, however, with row. That said, the pace of reduction was the weakest in this sequence and only marginal.

Ongoing reductions in employment reflected continued signs of spare capacity in the sector, with backlogs of work decreasing for the eighth consecutive month.

Firms also recorded a build-up of stocks of finished goods for the second month running amid some reports that weak demand had left finished products unsold.

August data pointed to a solid increase in input prices, thereby ending a three-month period of decline. A number of panellists linked higher input costs to rising oil prices, while increased food prices were also mentioned. In turn, firms also raised their own selling prices, albeit only slightly. The increase in charges was the first since March.

Suppliers’ delivery times shortened for the eighth successive month as stocks at suppliers remained sufficient to deal with orders despite a pick-up in demand for inputs during August. The improvement in vendor performance was solid, albeit the least marked since May.

Tentative improvements in market demand helped to strengthen business confidence midway through the third quarter, with firms hoping for a continued recovery in the months ahead. Optimism in the 12-month outlook for production was the highest in five months, but still below the series average amid ongoing concerns around the strength of demand.

Andrew Harker, economics director at S&P Global Market Intelligence, said that the latest S&P Global Vietnam Manufacturing PMI paints a more encouraging picture regarding the health of the sector than had been the case in recent months, with output, new orders, exports and purchasing all returning to growth.

Improvements were generally still quite muted, however, as demand conditions remained fragile. It is probably too early to say, therefore, that the sector is in full recovery mode.

Another key aspect from the latest survey was the end of the recent period of falling prices, with both input costs and selling charges up in August, often linked to higher oil prices, he said.

Source: Nhân Dân

Since the start of 2023, the State Bank of Vietnam has continuously reduced policy interest rates, by a total of 0.5-2 percentage points per year. It has also ordered credit institutions to minimise expenses to lower lending interest rates to aid businesses, people, and economic recovery.

The Government, ministries, and sectors have also issued an array of other support policies to remove bottlenecks in the economy.

These factors have been providing a boost for the real estate market to recover faster, more safely, and more sustainably, which also indicates that support policies are gradually proving useful, experts opined. 

Dr Can Van Luc, Chief Economist at the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and member of the National Financial and Monetary Policy Advisory Council, held that the property market underwent the most trying time, including financial difficulties caused by corporate bond-related problems.

The market has been gradually bouncing back since May, with the second quarter recording better results than in the first quarter. Industrial parks now have an occupancy rate of 76%, he noted.

Investors said prices of real estate stocks have increased 18% and construction tickers 39%. Procedural and legal obstacles facing many real estate projects have also been tackled.

Interest rates have returned to the levels in the first half of 2022.

Specialists of the WiGroup JSC, which provides economic data and fintech solutions in Vietnam, forecast the property market will witness observable improvements from late 2023 or early 2024. Compared to the pre-pandemic period, developments in the market at present are similar to those in 2014-2015.

They pointed out that the investor sentiment has improved, procedures related to investment procedures been removed, interest rates slashed, lending ceiling limits raised, and public investment disbursement accelerated while consumption and tourism stimulated. These factors are fueling real estate transactions.

Lower interest rates will be the main driver for the property sector. While deposit interest rates have been reduced since Q1, lending rate cuts are slower but still continue. Besides, a more favourable legal corridor has also helped facilitate real estate supply, according to WiGroup.

Nguyen Quoc Anh, Deputy Director General of Batdongsan.com.vn – an online property trading platform, said if deposit interest rates continue to drop to under 10% by the end of this year, the money people put into their deposit accounts in late 2022, when deposit interest rates surged, will be withdrawn and channelled into the market.

Echoing the view, Chairman of the Vietnam Association of Realtors Nguyen Van Dinh perceived that if lending interest rates for both new and old loans decline, the financial pressure on investors will ease. Besides, if deposit interest rates are brought down to under 5%, money will return to real estate and foster transactions in the market.

Source: Vietnamplus