Vietnamese manufacturing continued to strengthen in January, supportedby a further growth in new orders, according to HSBC's VietnamManufacturing Purchasing Managers' Index monthly report released onFebruary 2.
As a result, employment increased at a solid pace that was the sharpest since December 2013.
Meanwhile,input costs decreased at the fastest pace in the survey's history as aresult of falling fuel prices. This in turn led manufacturing firms toreduce their output prices sharply.
The headline seasonallyadjusted Purchasing Managers' Index (PMI) – a composite indicatordesigned to provide a single-figure snapshot of operating conditions inthe manufacturing economy – pointed to a further modest strengthening ofbusiness conditions at Vietnamese manufacturing firms, posting 51.5 inJanuary compared to 52.7 in December.
Operating conditions have now improved in each of the past 17 months, it said.
Bothoutput and new orders continued to rise at the start of 2015, albeit atweaker rates than seen in December. Improving client demand had beenbehind the rise in new work, in turn leading firms to raise production.New export orders, meanwhile, rose only slightly amid some reports ofweakening demand in export markets.
A slowdown in growth of neworders, as well as reported productivity improvements, led to areduction in backlog of work in the sector. The decline in outstandingbusiness was also reflective of a solid rise in employment. Moreover,the rate of job creation was the sharpest in just over a year, and oneof the fastest in the history of the series.
Falls in the globalprice of oil led a number of respondents to report reduced fuel costs inJanuary. Consequently, input prices decreased at the sharpest pace inthe survey's history, surpassing the previous record set in June 2012.
Inresponse to sharp reductions in input costs, manufacturers loweredtheir prices accordingly. Charges decreased for the fourth monthrunning, and to the greatest extent in 30 months.
A modestimprovement in vendor performance was registered in January, withpanellists suggesting that faster payments and requests for quickerdeliveries had resulted in shorter lead times. Delivery times have nowshortened in each of the past four months.
Purchasing activityincreased for the 17th successive month, albeit at the weakest pacesince October. Where purchasing rose, this was linked to higherproduction requirements.
Despite a rise in input buying, stocksof purchases decreased for the first time in three months. According torespondents, inputs purchased in previous months had been used forproduction in January.
Stocks of finished goods also decreased asproducts were delivered to clients. The fall in post-productioninventories ended a six-month sequence of accumulation.
Commentingon the Vietnam Manufacturing PMI survey, Trinh Nguyen, Asia Economistat HSBC, said, "The deceleration of global demand is taking a bite atoutput growth, although competitive pricing helps counter the slowdownof external demand.”
"Despite slowing new export orders,employment rose sharply, highlighting strong demand for Vietnamesegoods, necessitating new headcount,” the economist added.
"Withinput prices decelerating, thanks to the sharp decline in oil prices,and inventories low, we expect output to continue to expand in February,although the Lunar New Year festivity means there will be some seasonalslowdown," Trinh Nguyen further said.-VNA
As a result, employment increased at a solid pace that was the sharpest since December 2013.
Meanwhile,input costs decreased at the fastest pace in the survey's history as aresult of falling fuel prices. This in turn led manufacturing firms toreduce their output prices sharply.
The headline seasonallyadjusted Purchasing Managers' Index (PMI) – a composite indicatordesigned to provide a single-figure snapshot of operating conditions inthe manufacturing economy – pointed to a further modest strengthening ofbusiness conditions at Vietnamese manufacturing firms, posting 51.5 inJanuary compared to 52.7 in December.
Operating conditions have now improved in each of the past 17 months, it said.
Bothoutput and new orders continued to rise at the start of 2015, albeit atweaker rates than seen in December. Improving client demand had beenbehind the rise in new work, in turn leading firms to raise production.New export orders, meanwhile, rose only slightly amid some reports ofweakening demand in export markets.
A slowdown in growth of neworders, as well as reported productivity improvements, led to areduction in backlog of work in the sector. The decline in outstandingbusiness was also reflective of a solid rise in employment. Moreover,the rate of job creation was the sharpest in just over a year, and oneof the fastest in the history of the series.
Falls in the globalprice of oil led a number of respondents to report reduced fuel costs inJanuary. Consequently, input prices decreased at the sharpest pace inthe survey's history, surpassing the previous record set in June 2012.
Inresponse to sharp reductions in input costs, manufacturers loweredtheir prices accordingly. Charges decreased for the fourth monthrunning, and to the greatest extent in 30 months.
A modestimprovement in vendor performance was registered in January, withpanellists suggesting that faster payments and requests for quickerdeliveries had resulted in shorter lead times. Delivery times have nowshortened in each of the past four months.
Purchasing activityincreased for the 17th successive month, albeit at the weakest pacesince October. Where purchasing rose, this was linked to higherproduction requirements.
Despite a rise in input buying, stocksof purchases decreased for the first time in three months. According torespondents, inputs purchased in previous months had been used forproduction in January.
Stocks of finished goods also decreased asproducts were delivered to clients. The fall in post-productioninventories ended a six-month sequence of accumulation.
Commentingon the Vietnam Manufacturing PMI survey, Trinh Nguyen, Asia Economistat HSBC, said, "The deceleration of global demand is taking a bite atoutput growth, although competitive pricing helps counter the slowdownof external demand.”
"Despite slowing new export orders,employment rose sharply, highlighting strong demand for Vietnamesegoods, necessitating new headcount,” the economist added.
"Withinput prices decelerating, thanks to the sharp decline in oil prices,and inventories low, we expect output to continue to expand in February,although the Lunar New Year festivity means there will be some seasonalslowdown," Trinh Nguyen further said.-VNA
