Vietnammanufacturing PMI reaches 33 month peak

The country’s Purchasing Managers’ Index (PMI) rose for the second month in January posting 52.1 from 51.8 in December, HSBC Vietnam announced February 6. The bank said the data pointed to a fifth consecutive monthly improvement in business conditions for the sector and the second-strongest in the survey’s history, just short of the record set in April 2011.

The survey is a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy.

In January, production growth was also second-fastest in the series’ history. Output rose for the fourth month running, with rising new orders and the completion of outstanding business mentioned by respondents.

New orders increased for the fourth time in the past five months, and at a solid pace that was little-changed from December, the bank said.

The delivery of goods led to a marked reduction in post-production inventories at manufacturing firms. The rate of depletion was the fastest seen since February 2013. Rising production requirements led firms to take on extra staff in January. Employment has now risen in each of the last six months and while the rate of job creation fell slightly against December, it has remained solid, the survey added.

The report also showed a further increase in input prices registered in January, with the rate of cost inflation little-changed from those seen at the end of 2013. A number of panellists reported that suppliers had raised prices. Higher input costs led manufacturers to raise their prices throughout the month meaning the third output price increase in the past four months, though only marginal.

January data signalled a record rise in purchasing activity in the Vietnamese manufacturing sector, with input buying markedly increasing over the month.

Speaking about the survey, Trinh Nguyen, Asia Economist at HSBC said, “The notable bounce of the manufacturing sector reflects strengthening demand, both domestic and abroad. The continued increase of employment shows that manufacturers are upbeat about the sector’s growth outlook. We expect exports to boast another strong year in Vietnam, lifting growth to 5.6 per cent. With input price inflation stable, the State Bank of Vietnam has space to keep rates on hold.”

The HSBC Vietnam Manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in around 400 manufacturing companies. The panel is stratified geographically and according to the Standard Industrial Classification (SIC) group, based on industry contribution to Vietnam’s GDP.