Business climate for Vietnam’s manufacturing sector improved: HSBC

November 06, 2014 | 16:58

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Business conditions in the Vietnamese manufacturing sector improved slightly in October as output and new orders increased and firms took on extra staff at the fastest rate since January, according to the Purchasing Managers’ Index (PMI) report by the Hong Kong and Shanghai Banking Corporation (HSBC) and Markit Economics.

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The report, released on November 3, pointed out that the rate of inflation slowed for the third month in a row, and enterprises were able to pass on cost reductions to their clients by lowering output prices.

Meanwhile, manufacturers in Vietnam saw the amount of new orders increase for the second month running, following a marginal decline in August, although the latest increase was weaker than in September, the report said.

According to experts involved in the report, the number of orders was boosted by export sales that increased rapidly over the last six months.

The report attributes the increase in productivity for the 13 th month running to the increase in orders in October, even though the growth rate in production was minimal.

Increased output requirements were the main driver behind a consecutive monthly rise in employment, the report said, adding that the job creation rate was the fastest so far this year.

This added capacity enabled manufacturers to work through outstanding business, with backlogs of work decreasing for the sixth month in a row, the report said.

Trinh Nguyen, Asia Economist at HSBC, said Vietnam was on a gradual path to economic recovery.

The October PMI shows that the manufacturing sector continues to expand thanks to higher export orders, highlighting the country’s competitiveness in labour-intensive manufacturing, he said.

The employment index grew sharply, a positive sign of manufacturers’ outlook for future demand, he assured.