“Post-production inventory levels increased at a solid rate in June, reversing the downward trend seen in May. A number of manufacturers noted that lower-than-expected sales had resulted in unwanted inventory building,” according to the report.

Key points:

• Sharpest deterioration of business conditions since February
• New export work drops at fastest pace for eight months
• Input prices fall at fastest rate since survey began in April 201

“The continued slowdown of manufacturing activity suggests that businesses continue to face tough operating conditions in Vietnam,” said HSBC economist Trinh Nguyen. “Demand is low both internally and externally. Prices are continuing to decelerate due to low demand and commodity prices, as indicated by the drop in input prices. The SBV lowered rates in the first half of the year by 400bp to spur spending in Vietnam. This is likely to filter through in the second half, boosting economic activity.”