Vietnam’s manufacturing PMI hits 2019 peak again
Vietnam’s manufacturing PMI hits 2019 peak again
Although ASEAN manufacturing conditions slipped into contraction territory in June, the Vietnam Manufacturing Purchasing Managers’ Index (PMI) again reached its 2019 record high as business conditions kept improving.
According to a report launched by IHS Markit on July 1, the Vietnam PMI was 52.5 in June, up from 52 in May. The average PMI reading for the second quarter of 2019 was above that recorded in the opening three months of the year, albeit remaining short of the 2018 average.
For Southeast Asia, the headline index fell below the crucial 50 mark separating improvement from deterioration, staying at 49.7 in June, down from 50.6 in May. It was the first slowdown at ASEAN manufacturing firms in four months but was only fractional.
In fact, five of the seven monitored countries continued to report stronger business conditions, though three of them saw growth weaken compared with the previous month.
Myanmar recorded solid improvement in the health of its manufacturing sector (53) with sharp expansions in output and new orders. Vietnam also saw a strong improvement in operating conditions, with the joint-highest reading (52.5) seen in the year to date, the report said.
Vietnamese manufacturers continued to record solid growth in new orders in June, with the rate of expansion ticking up to a six-month high. Panelists, who conducted the PMI survey, linked the latest rise to the launch of new products and increased customer numbers.
Less positive data was seen with regard to new export orders, which rose at the slowest pace since February. There were some reports that U.S.-China trade tensions had negatively affected export orders.
A rise in new orders was the key factor leading to the 19th successive monthly rise in manufacturing production in Vietnam. The upturn in output was solid and broadly in line with those seen during the rest of the second quarter.
Continued new order growth led to a rise in backlogs of work in June, the first in 2019 so far. Firms responded to higher workloads by taking on extra staff, reversing the decline seen in May.
Alongside job creation, higher workloads also encouraged manufacturers to purchase additional input materials in June. Moreover, the rate of expansion was the fastest in three months.
Commenting on the latest survey results, Andrew Harker, associate director at IHS Markit, said that the Vietnamese manufacturing sector “continues to bob along nicely midway through 2019.”
The second quarter of the year saw solid growth that was broadly stable across the period and an improvement on the first quarter. Ongoing strength in demand encouraged firms to fill positions that had been vacated by resigning staff in May, leading to a return to job creation.
One concern outlined by some firms was U.S.-China trade situation, which contributed to the moderation of export growth and weaker business confidence. Where growth was predicted, respondents linked optimism to planned business investment, new product launches and entry into new markets.
Although manufacturers remained optimistic that output would increase over the coming year, the level of confidence dropped sharply in June and was the lowest since February.
