Industrial production and inventories fell sharply during Tet month

According to the General Statistics Office, the estimated index of industrial production (IIP) in January 2012 decreased by 12.9% compared to the previous month.

Regarding the cause, the recent 9-day Tet holiday is the main reason for the sharp decline in industrial production. During the same period last year (February 2011), this index decreased by over 17%.

Therefore, the sharp decline in IIP last month is not a big change.
However, the fact that the IIP index in January 2012 decreased by 2.4% compared to the same period last year is a difference. During the same period last year, the IIP index grew by approximately 1% compared to the same period last year. This development shows that industrial production still has challenges ahead.

Another notable point is that last year's Tet holiday, total retail sales excluding price factors increased by 8.7%, but this year the increase was only 4%, showing that demand has narrowed much more and provided less support for industrial production growth.

Meanwhile, prolonged high interest rates continue to pose a major challenge to businesses’ ability to survive. At the same time, the price indexes of industrial producers’ products have increased at a lower rate than the transport price index and the price indexes of production materials for many months.

Commenting on the correlation of these indexes, a representative of the General Statistics Office recently affirmed that this is a manifestation of difficulties for industrial production enterprises in the coming time.

Therefore, the trend of adjusting cash flow balance in industrial enterprises has been quite clear in the recent period. Despite the expected increase in consumption during Tet, inventory levels tend to decrease.

In fact, the consumption index of the processing industry in December 2011 increased by 6.2% compared to the previous month, about 2 times higher than the previous month. This is a quite favorable development to support businesses in consuming inventories from the previous period.

In addition, the inventory index as of January 1, 2012 decreased by about 3.1% compared to the previous month; compared to the same period last year, it only increased by 19.3%, instead of the 23% increase a month earlier.

Considering the same period of Tet in previous years, in comparison with the general increase in consumer prices, the above inventory index is quite low compared to previous periods, when it increased by nearly 40%.

However, high inventory index in the context of tight monetary and financial policies also brings warnings for some products such as engines of all kinds; motorbikes; optical cables; steel bars, angle steel; household metal products; mixed fertilizers...

According to NDHMoney