Sharp rise in new orders in Vietnam amid record growth of exports
Staff Writer |
Business conditions improved solidly in the Vietnamese manufacturing sector during May.
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Moreover, new orders rose at a sharper rate than in April, helped by a record expansion in new export business.
Growth of output and employment also picked up.
Manufacturers raised their output prices only slightly in the latest survey period, thereby helping to secure sales.
This was despite a sharp and accelerated increase in input costs.
The headline Nikkei Vietnam Manufacturing Purchasing Managers’ IndexTM (PMI) – a composite single-figure indicator of manufacturing performance – rose to 53.9 in May from 52.7 in April.
The latest reading signalled a solid improvement in the health of the sector, and the most marked since April 2017.
Business conditions have now strengthened on a monthly basis throughout the past two-and-a-half years.
As has been the case in each month since December 2015, new business increased during May.
Moreover, the rate of expansion was sharp and the fastest in 14 months.
The increase in overall new orders was supported by the strongest rise in new business from abroad since the survey began in March 2011.
With new orders increasing, firms raised output accordingly.
Production expanded at a solid pace, and one that was the fastest in three months.
Output increased across all three broad sectors, with growth strongest in investment goods.
Higher new orders also fed through to an increase in backlogs of work.
That said, the second successive rise in outstanding business was only slight.
In line with higher new orders and output requirements, manufacturers increased their staffing levels at a faster pace in May.
The rate of job creation was the sharpest since January.
The rate of growth in purchasing activity also quickened, and was the fastest since December 2016.
The rise in input buying helped lead to an increase in stocks of purchases, with panellists reportedly building inventories to support future output growth.
Stocks of finished goods also rose following a slight fall in April.
The rate of input cost inflation quickened to a threemonth high in May amid higher fuel costs and rising supplier charges.
The latest increase was stronger than the series average.
On the other hand, firms raised their own selling prices only slightly, and to the least extent in the current nine-month sequence of inflation.
Some panellists indicated that they had offered discounts in order to secure sales, limiting the upwards impact of higher input costs.
Suppliers’ delivery times continued to lengthen at a marginal pace during May, with respondents often linking delays to raw material shortages.
Alongside faster increases in output and new orders, business confidence picked up in May.
More than 52% of respondents expect a rise in production over the coming year, with confidence mainly linked to predictions of further new order growth. ■
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