The Vietnam Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - rose to 52.7 in April, up from 51.6 in March and signaling a solid monthly improvement in business conditions.
Vietnam's PMI rose to 52.7 in April.
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"Competitive pricing looks to have been a key driver of firms' success, with output prices rising only slightly despite strong cost inflation. Firms therefore appear willing to accept reduced margins in exchange for securing greater volumes of new work."
Firms mentioned particular strength in export markets. Meanwhile, input costs continued to rise at a sharp pace but output prices increased only modestly.
The health of the sector has now strengthened in each of the past 29 months. Central to the latest improvement in operating conditions was a marked pick-up in new orders, with the rate of growth at a three-month high.
Panelists reported strengthening client demand, with some highlighting new orders from export clients. New business from abroad rose to the greatest extent since last October. Some respondents signaled new work from customers in Japan. New order growth encouraged manufacturers to raise production during April.
Output increased at a solid pace, and one that was greater than seen in March. Further growth of production is expected over the coming year. Although sentiment dipped from the previous month, it remained strongly positive, with around half of all respondents expecting output to rise.
Faster growth of new orders contributed to an increase in backlogs of work in April, ending a five-month sequence of decline. Issues with machinery and staff shortages were also reportedly factors leading to the accumulation of unfinished work.
Alongside faster rises in output and new orders, Vietnamese manufacturers upped their rate of job creation in April. Jobs growth has now been registered in 25 successive months. Manufacturers signaled a further sharp increase in input costs amid higher prices for materials in global markets.
Moreover, the rate of inflation quickened slightly from the previous month. On the other hand, output prices rose only slightly, and at the weakest pace in the current eight-month sequence of inflation. Although some panelists raised charges in response to higher input costs, others offered discounts in order to attract customers.
Purchasing activity continued to rise in April, and at a stronger pace than in March as panelists responded to higher production requirements. This was also a factor behind a slight rise in stocks of purchases. In contrast to the picture for pre-production inventories, stocks of finished goods decreased, the ninth time in the past ten months in which a decline has been recorded.
Finally, suppliers' delivery times were broadly unchanged in April. Transportation issues and shortages of materials were behind longer lead times at some firms, but others indicated that requests for faster deliveries had been met.
