(Illustrative photo: VNA) Hanoi (VNS/VNA) - The opening month of this year saw a modestimprovement in business conditions in the Vietnamese manufacturing sector,according to a report by a London-based information services firm.
IHSMarkit released the Vietnam Manufacturing PMI report on February 3 fromresponses to monthly questionnaires sent to purchasing managers in a panel ofabout 400 manufacturers.
The Vietnam Manufacturing Purchasing Managers’ Index (PMI) remained above the 50.0neutral mark last month, posting 50.6 following a reading of 50.8 in Decemberlast year.
The indexsignalled a modest improvement in the health of the manufacturing sector at thestart of this year.
Supportingthe improvement in business conditions was a moderate rise in new orders.
The rateof input cost inflation gathered pace but remained relatively muted, whileoutput prices rose slightly for the second month running.
Respondentsindicated stronger customer demand had been behind the increase in new orders.Meanwhile, new export orders returned to growth following a slight reduction inDecember.
Althoughnew orders continued to rise, manufacturing production ticked down last year.
Outputhas now fallen in four of the past five months, but the pace of reductionremained marginal, said the report.
Thecombination of rising new orders and a scaling back of production led to anumber of firms to use stocks of finished goods to help meet new businessrequirements.
As aresult, post-production inventories decreased, and at the fastest pace in threemonths. Despite this, firms still reported an increase in backlogged work.The accumulation was the fifth in as many months, albeit only marginal.
Staffinglevels rose at a fractional pace in January, with the rate of job creation theweakest in the current three-month sequence of rising employment.
Manufacturersexpanded purchasing activity at a slightly faster pace in January.
Despitethe rise in input buying, stocks of purchases were broadly unchanged as somerespondents restricted stock holdings in line with lower output requirements.
Inputprices rose at the fastest pace for eight months, albeit one that was stillrelatively muted.
Highercosts of imported goods and supply shortages were reportedly behind the latestincrease.
Issues inthe supply of materials also contributed to a second successive lengthening ofsuppliers' delivery times, though only fractional.
Withinput costs increasing, firms raised output prices. Selling priceinflation was recorded for the second month running, with a modest rise in linewith that seen in December.
Confidencein the 12-month outlook for production improved at the start of the year andwas the highest for three months.
Positivesentiment mainly reflected predictions of rising new orders and the launch ofnew products.
Commentingon the results, Andrew Harker, associate director at IHS Markit, saidthere was more positive news in terms of new orders in the latest Vietnam PMI,with the expansion taking the current sequence of growth to 50 months.
“Despitethis, firms appear to be taking a step back from raising production at present,preferring to utilise inventories to help meet customer orders. This willlikely change soon, however, should the upward trajectory of new businesscontinue,” he added.
"TheVietnamese manufacturing sector looks set to be a star performer again in 2020,helping to support impressive growth in the wider economy. IHS Markit forecastsindustrial production to rise 7.9 percent during 2020.”/.
VNA
