Vietnam manufacturing PMI rebounds

Wednesday, 2017-07-05 10:23:29
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Vietnam Manufacturing Purchasing Managers’ Index (PMI) rose to 52.5 in June from a 14-month low of 51.6 in May (Photo: doanhnghiepvn.vn)
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NDO/ VNA - The Vietnam Manufacturing Purchasing Managers’ Index (PMI) rose to 52.5 in June, increasing from a 14-month low of 51.6 in May, the latest survey from Nikkei’s IHS Markit showed on July 3.

A reading above the 50 mark indicates economic expansion, while a reading below 50 points towards contraction.

"The pickup in growth in the Vietnamese manufacturing sector, in June, allays some of the concerns that were raised by the marked slowdown seen in May, with a solid rise in new business being particularly encouraging," Andrew Harker at IHS Markit said.

“Although slightly down from the first quarter of the year, the average PMI reading over Q2 points to a further solid expansion of Vietnamese manufacturing output. IHS Markit forecast a rise of 6.2% in Vietnamese GDP this year, with this data suggesting that the manufacturing sector is continuing to make a positive contribution.”

According to the survey, the latest reading signals a solid improvement in the health of the sector and one that is above the average since the survey began in March 2011.

After slowing significantly in May, the rate of growth in new orders accelerated in June. The latest increase in new business was solid and linked by panellists to the strengthening market demand. New export orders also rose at a faster pace than in June.

The expansion in total new business reflects the growth in the consumer and intermediate goods sectors, with the increase in the rate of growth particularly strong in the former. Meanwhile, investment goods firms saw a decline in new orders.

New order growth, allied with a strengthening client demand, resulted in an eighth successive monthly increase in output, with the rate of expansion increasing from that seen in May.

The rate of job creation also accelerated in June, with manufacturers in Vietnam responding to higher new orders and production requirements. This added operating capacity facilitated the reduction of the work backlog at some companies.

According to the survey, manufacturers raised their purchasing activities for the 19-month running, and at a solid pace. This helped lead to an increase in stock purchases, with a number of firms mentioning their efforts to build inventory reserves. Post-production inventories also expanded in June, but only slightly as some companies used their inventories to help fulfil orders.

"The rate of input cost inflation picked up but remained much weaker than seen in the first three months of the year. Despite higher cost burdens, firms have reduced their output prices for the second month running, amid reductions in the costs of some inputs and efforts to secure sales," it stated.