Output, new orders, job creation eased slightly but business confidence upped

By Duc Anh - Aug 13, 2018 | 03:41 PM GMT+7

TheLEADERVietnam Manufacturing Purchasing Managers’ Index (PMI) in July indicated a slight ease of output, new orders and job creation rate but still business confidence seen picked up.

According to the recent announcement of Nikkei – HIS Markit, Vietnam Manufacturing Purchasing Managers’ Index (PMI), a composite single-figure indicator of manufacturing performance, posted 54.9 in July, down marginally from 55.7 in June but still one of the highest since the survey began in March 2011. Business conditions have now strengthened in each of the past 32 months.

Growth in the Vietnamese manufacturing sector remained elevated in July, with rates of expansion in both output and new orders.

Respondents indicated that the rise in new business was in line with stronger client demand. Meanwhile, the rate of growth in new export orders quickened in July and was only slightly slower than May’s series record.

Firms responded to higher new orders by increasing output. The rate of expansion remained sharp, despite easing from the previous month. All three broad sectors saw output increase, led by intermediate goods.

The strong increase in output was sufficient to reduce backlogs of work for the second month running in July, albeit marginally.

The rate of job creation was solid, despite easing from June’s record high. Meanwhile, input buying rose at a substantial pace amid some reports of efforts to build inventory reserves.

Stocks of both purchases and finished goods increased. The rate of accumulation of preproduction inventories accelerated to a five-month high, while stocks of finished goods increased modestly in July following a fall in June.

The rate of input cost inflation remained elevated at the start of the third quarter, with panelists linking higher prices to raw material shortages. The passing on of increased input costs to customers resulted in a further monthly rise in output prices, with the rate of inflation little-changed from that seen in June.

Forecasts of further growth of new business over the next 12 months fueled optimism that output will continue to rise. Business confidence picked up from the previous month, with close to 51% of respondents predicting an increase in production.

Commenting on the Vietnamese Manufacturing PMI survey data, Andrew Harker, Associate Director at IHS Markit compiling the survey, said: “The Vietnam manufacturing PMI remained elevated in July as the sector continued to grow strongly. Confidence in the future was meanwhile illustrated by efforts of firms to build inventory reserves to prepare for further production growth and further solid hiring.”