Will services and manufacturing sectors keep recovering?

For 10M21, gross retail sales of consumer goods and services slid 8.6% YoY.

The government issued Resolution No.128/NQ-CP adopting provisional guidelines on “Safe, flexible adaption to and effective control of COVID-19 pandemic”. The government said the COVID-19 fight remains a key task in order to protect the public’s health and lives while trying to turn the country into a “new normal” as soon as possible.

Based on the guidelines, all 63 out of provinces and cities nationwide have announced COVID-19 risks levels, with the majority declaring COVID-19 risk levels at level 1 or level 2. This allowed most localities across the country to relax social distancing measures and reopen the economy.

Most non-essential services have been allowed to reopen since mid-Oct after the government issued Resolution No.128/NQ-CP. As a result, on a month-on-month basis, the service sector witnessed a steady recovery with gross retail sales of consumer goods and services increasing 18.1% mom (- 19.5% YoY). To be more specific, wholesale and retail sales edged up 14.5% mom (-13.5% YoY) as domestic demand slightly recovered. The revenue of accommodation and catering services rose 47.2% mom (-37.0% YoY) while the revenue of traveling service surged 298.9% mom (-63.4% YoY) amid the reopening of tourism and non-essential services in some provinces.

For 10M21, gross retail sales of consumer goods and services slid 8.6% YoY (vs. a decline of 7.2% YoY in 9M21 and a 0.1% decrease in 10M20). If exclude the price factor, this figure declined 10.3% YoY (vs. a decline of 4.5% in 10M20).

VNDirect expected revenue of the service sector to extend recovery in Nov as the government could further relax social-distancing measures and restrictions applied to non-essentials services thanks to higher vaccination rate.

Regarding the industrial sector, the IHS Markit Purchasing Managers' Index (PMI) of Vietnam in Oct 2021 stood above 50 for the 1st time since Jun 2021, indicating the recovery of industrial activities since Oct 2021. Also, Vietnam’s Oct Index of Industrial Production (IIP) rose 6.9% mom (-1.6% YoY), increasing from a growth rate of 5.0% mom (-5.5% YoY) seen in the previous month. 

“The recovery of industrial sectors is expected to accelerate in Nov as major industrial centers in the South of Vietnam, including Ho Chi Minh City, Binh Duong, and Dong Nai province, will welcome workers from other provinces back to work after the fourth wave of COVID-19 being contained and completing fully vaccinate for over 70% people over 18 years old”, VNDirect said.

Regarding sub-sector, those recorded growths over year-on-year basis, including mining support service activities (43.0% YoY), mining of coal and lignite (19.3% YoY), manufacture of wearing apparel (10.3% YoY), manufacture of basic metals (7.4% YoY), textiles (6.8% YoY) and manufacture of coke and refined petroleum products (6.8% YoY).

VNDirect still saw a strong contraction in the manufacture of other transport equipment (-28.2% YoY), manufacture of beverages (-22.0% YoY), extraction of crude petroleum and natural gas (-19.4% YoY), manufacture of motor vehicles (-18.6% YoY) and mining of metal ores (- 16.5% YoY).