Manufacturing sees sharp growth: HSBC
Manufacturing sees sharp growth: HSBC
Manufacturing growth regained momentum in November as output and new orders rose at faster rates and stocks of purchases increased at the sharpest pace in the survey's history, according to HSBC Viet Nam's Purchasing Managers' Index released on Monday.
Falling world commodity prices 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 PMI – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – rose to 52.1 in November from 51 in October, signalling the most marked improvement in business conditions in five months. Stronger operating conditions have been recorded each month since September 2013.
Manufacturing production increased for the 14th 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 a 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 raised employment 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 for 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 prices. The rate of decline was the fastest in nearly 18 months.
Reports from panellists about attempts to build inventory led to a series-record rise in stocks of purchases, following a decrease in the previous month. This was helped by a 15th 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 awaiting delivery to clients. Post-production inventories have now risen in each of the past five months.
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 the Viet Nam manufacturing sector is competitive. Thanks to lower labour costs than China, Vietnamese manufacturing is gaining global market share.
"The contraction of input prices mirrors the drop of headline CPI to 2.6 per cent year-on-year in November. We expect output to continue to rise, in contrast to the rest of the region."
The HSBC Vietnam Manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in around 400 manufacturing companies.
