Tuesday, 21 May 2019

Vietnam PMI rises to 7-year high in November

Updated at Monday, 03 Dec 2018, 08:11
The Hanoitimes - Business conditions strengthened at the second-fastest pace in the survey’s history, second only to the record seen in the first month of data collection.
The headline Nikkei Vietnam Manufacturing Purchasing Managers' index (PMI) in November climbed from a 7-year high to 56.5 from 53.9 in October, signaling a sharp monthly improvement in the health of the manufacturing sector, according to Nikkei and IHS Markit.

A reading below the 50 neutral mark indicates no change from the previous month, while a reading below 50 indicates contractions and above 50 points to an expansion.

Business conditions strengthened at the second-fastest pace in the survey’s history, second only to the record seen in the first month of data collection, according to the report.

The consumer goods sector was the strongest performer of the three broad sectors covered in the latest survey period, seeing the fastest rises in output, new orders and employment. New orders increased sharply in November, with the rate of expansion quickening for a second month in a row. 

New export business, meanwhile, rose at the same marked pace as total new business. Strong growth of new orders encouraged manufacturers to increase production. Moreover, the rate of output growth quickened to the fastest since March 2011. Output also looks set to increase further over the coming year as strong demand boosted manufacturers’ confidence. Sentiment jumped from that seen in October and was the highest since February 2016.

There were signs of capacity pressures returning to the sector as backlogs of work increased for the first time in six months and to the greatest extent since August 2017. 

Firms responded to greater workloads by taking on extra staff, and at a rapid rate. In fact, the pace of job creation was the fastest in the survey’s history, surpassing the previous record seen in June. 

Manufacturers increased their stocks of both inputs and finished goods at record rates as firms responded to higher new orders and prepared for likely further rises in sales in coming months. The accumulation of pre-production inventories was helped by a marked acceleration in the rate of growth of purchasing activity. 

Higher raw material prices resulted in a further increase in input costs in November, and one that was the most marked in three months. Rising cost burdens led manufacturers to increase their selling prices, the first time in three months in which this has been the case. 

A number of panelists mentioned that shortages of materials had contributed to higher prices for inputs, with supply issues leading some firms to report longer times for the delivery of inputs. That said, other manufacturers reported that their suppliers had been well prepared and reduced lead times. Overall, vendor delivery times were broadly unchanged.

“The Vietnamese manufacturing sector continued to defy recent signs of slowing demand elsewhere in the global economy during November, seeing a strong and accelerated increase in new orders and a near-record rise in output. Moreover, firms seem confident that the good news will continue, prompting them to build inventories and take on staff at the sharpest rates seen in the near eight year survey history so far, ” said Andrew Harker, associate director at IHS Markit, which compiles the survey.
Ngoc Thuy
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