HANOI, June 6 (Xinhua) -- Vietnam's industrial output expanded slightly in May as manufacturers showed some resilience amid global uncertainty, but enterprises are still facing difficulties due to the impact of increasing input production costs, Vietnam News reported on Tuesday.
Vietnam's industrial production in May slightly rebounded by 2.2 percent from the previous month and inched up 0.1 percent from a year earlier; however, the rebound is not strong enough to dispel concerns over a manufacturing downturn, said the General Statistics Office.
The country's factory activity in the January-May period fell 2 percent from a year earlier, against an 8.3 percent year-on-year expansion in the same period last year, mainly due to a slump in exports, highlighting the heavy hit from a slowing global economy.
The S&P Global Vietnam Manufacturing Purchasing Managers' Index, adding more to the concerns, fell to 45.3 in May, well below the 50.0 threshold that separates expansion from contraction in manufacturing activity, mainly driven by the steepest decline in new orders in 20 months.
Minister of Labor, Invalids, and Social Affairs Dao Ngoc Dung revealed during a question and answer session of the National Assembly that about 510,000 workers lost their jobs or had their hours cut in the first five months of the year, 55 percent of whom were laid off.
Traditional labor-intensive sectors, including textiles and footwear, have been hardest hit, followed by electronics and components, said the labor minister.
More than 8,600 companies, of which foreign-invested firms account for 27 percent and local private companies 72 percent, have trimmed their workforce, Minister Dung noted.
The General Statistics Office warned that the difficulties would continue due to rising input costs and external headwinds on the demand side.
Do Thi Ngoc, head of the statistics department, said a proactive and flexible monetary policy, in coordination with fiscal policies and other macro policies, will keep inflation under control and help the country meet its annual economic growth target.
She expected the central bank to cut policy interest rates further to reduce the cost of borrowing so that households and businesses are more willing to invest and spend.
Vietnam's central bank has cut several policy rates three times this year, lowering the refinancing rate to 5 percent and the discount rate to 3.5 percent.
According to HSBC, Vietnam's economy has yet to bottom out despite a flurry of stimulus measures, including slashing the value-added tax to bolster domestic consumption, accelerating fund injections to expedite public investment projects and releasing more liquidity into the economy to support struggling businesses.