Manufacturing growth gathered pace in May, with rising client demandleading to record growth in output and new orders, HSBC Vietnam has saidin a monthly report it released on June 1.
The Purchasing Managers' Index report said the rate of job creation also picked up pace during the month.
Input costs increased for the first time in seven months, but firms continued to lower their output prices.
Theheadline, seasonally adjusted Purchasing Managers' Index (PMI), acomposite indicator designed to provide a single-figure snapshot ofoperating conditions in the manufacturing economy, rose for the secondmonth running to 54.8 from 53.5 in April.
The marked improvementin operating conditions signalled by the latest reading was thestrongest since the series began in April 2011.
Business conditions have now improved in each of the past 21 months.
Centralto the marked strengthening of the sector's health was a recordincrease in new business. Respondents indicated that the rise mainlyreflected a greater need for products among customers. New export ordersalso rose, albeit at a much weaker pace than for total new business.
Asclient demand increased, manufacturers raised production accordingly.As a result, output increased for the 20th month in a row and at thestrongest pace in the series' history.
Firms were able to increase output partly as a result of a second successive month of job creation in May.
Employmentrose solidly and at the sharpest pace since January. There was stillevidence of pressure on capacity in the latest survey, however, asbacklog of work accumulated for the first time in five months.Panellists largely attributed higher outstanding business to a sharpgrowth in new orders.
After having fallen in each of the previoussix months, input costs for manufacturing firms rose. Higher oil andelectricity prices, as well as a weakening of the dong against the USdollar, were mentioned by respondents as the reasons for the increase.
Butthat said, the rate of inflation was relatively modest and firmscontinued to lower their prices amid competitive pressures. Prices havenow decreased in each of the past eight months.
Rising production requirements led manufacturers to increase their buying of inputs.
Purchasingactivity expanded sharply and at the fastest pace in the serieshistory. This contributed to a second successive monthly accumulation ofstocks of purchases, with the expansion also the fastest recorded inover four years of data collection so far.
Suppliers' deliverytimes lengthened marginally as panellists mentioned limited stockholdings by vendors. This was despite some reports that quick paymentshad led to faster deliveries. Delays in the dispatch of products toclients contributed to an accumulation of stocks of finished goods inMay, while strong output growth was also cited as a factor leading toincreased post-production inventories.
Andrew Harker, senioreconomist at Markit, which coordinates with the bank for the survey,said, "The Vietnamese manufacturing sector gained further momentum inMay and growth rates are now the best we have seen in the four years ofdata collection so far.
"Central to the recent success of firmsin Vietnam has been their ability to secure new work in a competitiveenvironment, and the recent 1 percent devaluation of the dong againstthe US dollar by the State Bank of Vietnam should help efforts tomaintain international competitiveness.
"On the other hand, somefirms did report a rise in costs as a result of the weaker currency,leading to a first rise in input prices in seven months."-VNA
The Purchasing Managers' Index report said the rate of job creation also picked up pace during the month.
Input costs increased for the first time in seven months, but firms continued to lower their output prices.
Theheadline, seasonally adjusted Purchasing Managers' Index (PMI), acomposite indicator designed to provide a single-figure snapshot ofoperating conditions in the manufacturing economy, rose for the secondmonth running to 54.8 from 53.5 in April.
The marked improvementin operating conditions signalled by the latest reading was thestrongest since the series began in April 2011.
Business conditions have now improved in each of the past 21 months.
Centralto the marked strengthening of the sector's health was a recordincrease in new business. Respondents indicated that the rise mainlyreflected a greater need for products among customers. New export ordersalso rose, albeit at a much weaker pace than for total new business.
Asclient demand increased, manufacturers raised production accordingly.As a result, output increased for the 20th month in a row and at thestrongest pace in the series' history.
Firms were able to increase output partly as a result of a second successive month of job creation in May.
Employmentrose solidly and at the sharpest pace since January. There was stillevidence of pressure on capacity in the latest survey, however, asbacklog of work accumulated for the first time in five months.Panellists largely attributed higher outstanding business to a sharpgrowth in new orders.
After having fallen in each of the previoussix months, input costs for manufacturing firms rose. Higher oil andelectricity prices, as well as a weakening of the dong against the USdollar, were mentioned by respondents as the reasons for the increase.
Butthat said, the rate of inflation was relatively modest and firmscontinued to lower their prices amid competitive pressures. Prices havenow decreased in each of the past eight months.
Rising production requirements led manufacturers to increase their buying of inputs.
Purchasingactivity expanded sharply and at the fastest pace in the serieshistory. This contributed to a second successive monthly accumulation ofstocks of purchases, with the expansion also the fastest recorded inover four years of data collection so far.
Suppliers' deliverytimes lengthened marginally as panellists mentioned limited stockholdings by vendors. This was despite some reports that quick paymentshad led to faster deliveries. Delays in the dispatch of products toclients contributed to an accumulation of stocks of finished goods inMay, while strong output growth was also cited as a factor leading toincreased post-production inventories.
Andrew Harker, senioreconomist at Markit, which coordinates with the bank for the survey,said, "The Vietnamese manufacturing sector gained further momentum inMay and growth rates are now the best we have seen in the four years ofdata collection so far.
"Central to the recent success of firmsin Vietnam has been their ability to secure new work in a competitiveenvironment, and the recent 1 percent devaluation of the dong againstthe US dollar by the State Bank of Vietnam should help efforts tomaintain international competitiveness.
"On the other hand, somefirms did report a rise in costs as a result of the weaker currency,leading to a first rise in input prices in seven months."-VNA
