Vietnam’s PMI sees slight growth in early Q2

The Purchasing Managers’ Index (PMI) of Vietnam’s manufacturing sector posted 51 points in April, up slightly from 50.8 a month ago, signalling improvements in operating conditions for the first time in almost two years.
The Purchasing Managers’ Index (PMI) of Vietnam’s manufacturing sectorposted 51 points in April, up slightly from 50.8 a month ago, signallingimprovements in operating conditions for the first time in almost twoyears.

The figure was released by the Hong Kong andShanghai Banking Corporation (HSBC) in its recent report on Vietnam’s PMI at the beginning of the second quarter.

According to the report, announced on May 2, manufacturing output rosefor the second successive month during April, albeit at a slightlyslower pace than in March.

Higher output reflected afurther increase in incoming new orders, as companies reported improvedsales to domestic clients. Meanwhile, subdued international marketconditions meant that the level of new export business showed only anegligible increase compared to one month earlier.

Manufacturing employment also rose for the second consecutive monththanks to job growth linked to the recent mild recoveries in productionand new order volumes.

April data pointed to afurther solid decrease in work-in-hand (but not yet completed) volumes. Anumber of firms reported that they had satisfied existing contractsfrom stock holdings to clear backlogs of work. Inventories of finishedgoods were depleted for the sixth month running.

The report also said average input costs increased again during April,with manufacturers reporting that they were paying higher prices in bothdomestic and world markets.

Vietnammanufacturers reported that competitive market conditions restrictedtheir ability to pass on rising costs to their clients. Subsequently,average output prices declined for the first time in three months, withthe sharpest rate of decrease since December 2012.

Some manufacturers revealed that they were offering discounted prices in order to support sales volumes.

Stocks of purchases declined again in April, meaning that inventorieshave fallen throughout the past one-and-a-half years. This was despite asolid increase in input buying volumes, which was partly initiated toreduce the pressure on raw material stocks.

Theexpansion of manufacturing activity reflects a gradual improvement ofdomestic demand, the HSBC said, adding the manufacturing sectorcontinues to see growth symbolised in the rise of employment and output.

While the economy is weighed down by theunderperformance of the state sector, the private sector, especially themanufacturing industry, continues to pull its weight to sustain theeconomy.

The year-to-date increase of foreigninvestment into manufacturing shows Vietnam's still-strongcompetitiveness in labour-intensive manufacturing, said HSBC.-VNA

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