Illustrative image (Photo: Internet) Hanoi (VNS/VNA) - The start of the fourth quarter of the year saw the continued recovery of the Vietnamese manufacturing sector, with thecountry’s Manufacturing Purchasing Managers' Index (PMI) posting 51.8 inOctober.
According to the survey released by Nikkei and IHS Markit on November 2, theindex was down marginally from 52.2 in September but still signalling animprovement in the health of the sector. With the pandemic remaining undercontrol in the country, firms recorded solid improvements in new orders andoutput. Moreover, employment returned to growth following an eight-monthsequence of job cuts.
Improving operating conditions were noted in the consumer and intermediategoods sectors. On the other hand, investment goods firms posted adeterioration, amid further falls in both output and new orders.
Anecdotal evidence suggested that success in bringing the COVID-19 outbreakunder control in Vietnam had helped lead to a recovery in customer demand. As aresult, new orders increased solidly for the second month running, subsequentlyfeeding through to a similarly-paced increase in production to that seen fornew business.
Meanwhile, new export orders were unchanged amid some demand weakness inmarkets where the virus continues to cause problems, notably in Europe. Greateroutput requirements encouraged manufacturers to take on extra staff in October.Employment increased for the first time since January, though at only amarginal pace amid ongoing signs of spare capacity. Backlogs of work continuedto decrease.
Higher output requirements also led to a second successive monthly increase inpurchasing activity, although stocks of purchases decreased as inputs were usedto support output growth. Stocks of finished goods were also depleted at thestart of the final quarter of the year.
The COVID-19 pandemic continued to cause issues in supply chains duringOctober. Suppliers' delivery times lengthened to a greater extent than inSeptember. Alongside the direct impacts of the pandemic, shortages of materialsand poor weather conditions reportedly contributed to delivery delays.
Material shortages led to accelerating cost inflation, with input pricesincreasing at the fastest pace since August 2018. The passing on of higherinput costs to customers resulted in a second consecutive rise in sellingprices. That said, the increase was only marginal and little-changed from thatseen in the previous month. Restricting the ability of firms to raise outputprices were requests for discounts by clients and competitive pressures.
Firms were generally confident that output will increase over the coming yearamid optimism that the virus will remain under control. A number of respondentspredicted that new order growth would support rises in production. That said,sentiment was slightly lower than in the previous month and weaker than theseries average.
Commenting on the latest survey results, Andrew Harker, economics director atIHS Markit, said: “The Vietnamese manufacturing sector started the finalquarter of the year on a solid footing, according to the latest PMI data. Thisshould continue as long as COVID-19 remains under control in the country. Themost pleasing aspect of the latest survey was a return to growth of employmentfor the first time since before the pandemic hit as workloads start to justifyrising staffing levels."
“A positive end to the year could set the economy up nicely for a strongrecovery to kick in during 2021," he said.
Reports from the General Statistics Office also showed Vietnam’s industrialproduction rose by 5.4 percent year-on-year in October, after a 3.8 percentgain a month earlier.
This was the strongest increase in industrial output since June, amid intensivepublic health measures to contain the spread of the coronavirus outbreak in thecountry, with output expanding much faster for both manufacturing./.
According to the survey released by Nikkei and IHS Markit on November 2, theindex was down marginally from 52.2 in September but still signalling animprovement in the health of the sector. With the pandemic remaining undercontrol in the country, firms recorded solid improvements in new orders andoutput. Moreover, employment returned to growth following an eight-monthsequence of job cuts.
Improving operating conditions were noted in the consumer and intermediategoods sectors. On the other hand, investment goods firms posted adeterioration, amid further falls in both output and new orders.
Anecdotal evidence suggested that success in bringing the COVID-19 outbreakunder control in Vietnam had helped lead to a recovery in customer demand. As aresult, new orders increased solidly for the second month running, subsequentlyfeeding through to a similarly-paced increase in production to that seen fornew business.
Meanwhile, new export orders were unchanged amid some demand weakness inmarkets where the virus continues to cause problems, notably in Europe. Greateroutput requirements encouraged manufacturers to take on extra staff in October.Employment increased for the first time since January, though at only amarginal pace amid ongoing signs of spare capacity. Backlogs of work continuedto decrease.
Higher output requirements also led to a second successive monthly increase inpurchasing activity, although stocks of purchases decreased as inputs were usedto support output growth. Stocks of finished goods were also depleted at thestart of the final quarter of the year.
The COVID-19 pandemic continued to cause issues in supply chains duringOctober. Suppliers' delivery times lengthened to a greater extent than inSeptember. Alongside the direct impacts of the pandemic, shortages of materialsand poor weather conditions reportedly contributed to delivery delays.
Material shortages led to accelerating cost inflation, with input pricesincreasing at the fastest pace since August 2018. The passing on of higherinput costs to customers resulted in a second consecutive rise in sellingprices. That said, the increase was only marginal and little-changed from thatseen in the previous month. Restricting the ability of firms to raise outputprices were requests for discounts by clients and competitive pressures.
Firms were generally confident that output will increase over the coming yearamid optimism that the virus will remain under control. A number of respondentspredicted that new order growth would support rises in production. That said,sentiment was slightly lower than in the previous month and weaker than theseries average.
Commenting on the latest survey results, Andrew Harker, economics director atIHS Markit, said: “The Vietnamese manufacturing sector started the finalquarter of the year on a solid footing, according to the latest PMI data. Thisshould continue as long as COVID-19 remains under control in the country. Themost pleasing aspect of the latest survey was a return to growth of employmentfor the first time since before the pandemic hit as workloads start to justifyrising staffing levels."
“A positive end to the year could set the economy up nicely for a strongrecovery to kick in during 2021," he said.
Reports from the General Statistics Office also showed Vietnam’s industrialproduction rose by 5.4 percent year-on-year in October, after a 3.8 percentgain a month earlier.
This was the strongest increase in industrial output since June, amid intensivepublic health measures to contain the spread of the coronavirus outbreak in thecountry, with output expanding much faster for both manufacturing./.
VNA
