Manufacturing PMI signals worsening operating conditions

However, the rate of deterioration was only slight. This was highlighted by a rise in the headline index from 47.9 to a five-month high of 49.2 points.  

September’s data showed that manufacturing output was little changed since the month before, following a solid reduction one month previously.

Meanwhile, new orders decreased again in September, with panelists largely attributing this to subdued market demand conditions.

The rate of decline in new work was the weakest in the current five-month period of contraction, however, only modest.

In contrast, the pace of reduction in new export business accelerated since the month before.  

Although only modest, the latest decrease in foreign orders was the sharpest recorded by the series to date.

The size of the Vietnamese manufacturing sector workforce was changed little in September. Meanwhile, the backlog of work declined at a sharp rate that was the steepest in the short series history.

The latest decrease in outstanding business extended the current period of reduction to six months.

Purchasing activity continued to fall in September. The rate of decline in input buying was only slight, however, having eased markedly for a second successive month.

Stocks of purchases fell as a result, although the rate of decline was the slowest since November, 2011.

Meanwhile, companies continued to report shorter lead times from vendors, largely reflective of sufficient stock of inputs at suppliers.

The average input costs faced by goods producers rose for a second successive month in September, with the rate of inflation accelerating to a five-month high.

The overwhelming reason given by panelists for a rise in average prices was that raw material costs had increased over the month.  Some survey respondents also mentioned higher prices paid for fuel.

Despite the rise in average costs, goods producers reduced their output charges during September in an attempt to attract new business. The rate of output price discounting was only slight.

Commenting on the Vietnam Manufacturing PMI survey, Trinh Nguyen, Asia economist at HSBC said: “The stabilisation of manufacturing activity in Vietnam is a positive development, especially given the downturn of the global trade cycle and  the still-fragile domestic business environment. New export orders continue to contract but, at close to 50.0, the print for the output index is in line with our view that growth will pick up in the fourth quarter.”