Vietnam manufacturing PMI hits record high in April
Vietnam manufacturing PMI hits record high in April
* Record rises in new orders and purchasing activity
* Employment returns to growth
* Cost inflation quickens to sharpest since September 2013
The Vietnamese manufacturing sector continued its recent run of improvement in April as the PMI hit a new series-record high, surpassing the previous best from
April 2011. New business rose at a record pace, supporting strong growth of production and purchasing activity. Meanwhile, employment rose during the month
following a slight reduction in March. The rate of input price inflation picked up as firms reported higher shipping costs.
The headline seasonally adjusted Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – rose to 53.1 in April from 51.3 in the previous month. Business conditions have now strengthened in each of the past eight months, with the latest improvement the strongest in the history of the survey which began in April 2011.
The rate of growth in new orders received by Vietnamese manufacturers accelerated for the second month running in April and was the fastest in the series
history. Improved client demand and broadly stable output prices had reportedly contributed to higher new orders. New business from abroad also rose at a record
pace during the month.
Higher new orders and improved productivity led to a seventh successive monthly increase in output in the Vietnamese manufacturing sector. The rate of growth quickened and was second only to that recorded in April 2011.
Rising new orders led manufacturing firms to increase their purchasing activity in April. Furthermore, input buying expanded at a survey-record pace. This contributed to a first rise in stocks of purchases since October 2013 as some panellists reported having increased inventories in response to expectations of
further growth of new business in coming months.
Manufacturers also took on extra staff during the month, following a marginal reduction in employment in March. Job creation has now been recorded in eight of the past nine months.
Rising new business contributed to an increase in backlogs of work, ending a five-month sequence of depletion. Stocks of finished goods also accumulated in
April, albeit only marginally. Some panellists indicated that delays in the delivery of goods to clients had contributed to the rise in inventories.
The rate of input cost inflation quickened for the first time in four months. Respondents mainly attributed the increase in input prices to higher shipping costs as a result of new government rules. This also reportedly had an impact on supplier lead times during the month, with vendors lowering the amount of goods they shipped. Suppliers’ delivery times lengthened to the greatest extent since April 2011. Meanwhile, Vietnamese manufacturing firms lowered their output prices for the second month running.
Comment
Commenting on the Vietnam Manufacturing PMI™ survey, Trinh Nguyen, Asia Economist at HSBC said: “The manufacturing sector is doing the heavy lifting in
Vietnam and its improvement will help bolster beleaguered domestic demand. The strong bounce of output, new orders, new export orders and employment are much needed to counter balance the domestic slump. We expect exports to have another stellar year, in contrast to the rest of the region, due to increased investment of manufacturing into the country and trade negotiations to expand market access. We expect growth to accelerate slightly to 5.6% this year from 5.4% in 2013. Most of this will come from the manufacturing and service sectors as construction and
agriculture sectors lag behind.”
HSBC
