HSBC Vietnam manufacturing PMI: Sharpest rise in output since April
HSBC Vietnam manufacturing PMI: Sharpest rise in output since April
Growth in the Vietnamese manufacturing sector regained momentum in November as output and new orders rose at faster rates and stocks of purchases increased at the sharpest pace inthe survey’s history. Falling prices in world commodity markets impacted the sector, with input costs decreasing for the first time since late 2012 and output prices falling at the sharpest rate since June 2013.
The headline seasonally adjusted Purchasing Managers’ Index™ (PMI™) a composite indicator designed to provide a single figure snapshot of coperating conditions in the manufacturing economy rose to 52.1 in November, from 51.0 in October, and signalled the most marked improvement in business conditions in five months. Stronger operating conditions have been recorded in each month since September 2013.
Manufacturing production in Vietnam increased for the fourteenth successive month in November, with the rate of growth quickening to the fastest since April.
Panellists linked higher output to improving client demand, and this was borne out by a solid increase in new business. Competitive pricing and good quality products had reportedly been key in securing new work from both domestic and export markets. New export orders rose for the third month running, and at the fastest pace since April.
Higher new orders led backlogs of work to increase in November, ending a six month sequence of falling outstanding business. Employment also rose, as has
been the case in seven of the past eight months. Although easing slightly from October, the rate of job creation remained solid as firms reported having raisedemployment in response to increases in new orders and production requirements.
Input prices decreased for the first time since December 2012. Prior to November, the pace of cost inflation had slowed in three consecutive months. Panellists mainly attributed lower input costs to falling prices in global commodity markets.
Lower input costs were partly behind a second successive monthly fall in output prices as firms passed savings on to clients. Efforts to stimulate demand were also mentioned by some of those companies that lowered charges. The rate of decline quickened to the fastest in close to a year and a half.
Reports from panellists of attempts to build inventory reserves led to a series record rise in stocks of purchases, following a decrease in the previous month. This was helped by a fifteenth successive month of rising purchasing activity at manufacturers. Despite higher demand for inputs, suppliers’ delivery times shortened again in November amid reports of good availability of materials and spare capacity at suppliers. Stocks of finished goods also increased, albeit only marginally. Some panellists reported that completed products were being held awaiting delivery to clients. Post-production inventories have now risen in each of the past five months.
Comment
Commenting on the Vietnam Manufacturing PMI™ survey, Trinh Nguyen, Asia Economist at HSBC said: “The sharp rise of the PMI index in November reflects our view that Vietnam manufacturing sector is competitive. Thanks to lower labour costs than China, Vietnam manufacturing is gaining global market share. The contraction of input prices mirrors the drop of headline CPI to 2.6% y-o-y in November. We expect output to continue to rise, in contrast to the rest of the region.”
