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PMI down to 51.3 in August

Released at: 17:09, 01/09/2015

PMI down to 51.3 in August

Improvement in business conditions at its lowest since March, according to latest report from Nikkei and Markit Economics.

by Thu Hoang

The Nikkei Vietnam Manufacturing Purchasing Managers’ Index (PMI), a composite single-figure indicator of manufacturing performance, posted 51.3 in August, down from 52.6 in July, and signaling the weakest improvement in business conditions since March, according to latest report from Nikkei and Markit Economics.

Having said that, “the health of the sector has now strengthened on a monthly basis throughout the past two years,” the report stated.

Manufacturing output increased at the slowest pace in ten months amid reports of weakening client demand. Growth of new business also eased in August, but remained solid as panelists indicated having secured new work from both new and existing clients, according to the report.

In contrast to the trend in total new business, new export orders decreased for the third month running.

“Declining demand from international clients and competitive pressures from Chinese firms were mentioned as factors leading to the fall in new export orders,” the report stated.

China was also mentioned with regard to changes in prices during August, with the depreciation of the Yuan reportedly a cause of lower input prices.

Falling prices in world markets for items such as steel and oil were also mentioned by those firms that recorded a drop in input costs, which was the sharpest since February.

Panelists passed on lower input costs to their clients, with price competition also a factor adding to deflationary pressures. The latest fall in charges was among the sharpest in the series’ history.

Weaker growth of new orders led to backlogs of work decreasing for the third consecutive month, but firms continued to raise their staffing levels in August. The rate of job creation, however, slowed against July.

“Suppliers’ delivery times improved for the first time in six months during August, with panelists linking shorter delivery times to fast payments and requests for quicker deliveries,” the report stated.

As has been the case on a monthly basis throughout the past two years, purchasing activity rose in August. However, stocks of purchases decreased for the second month in a row.

Stocks of finished goods also declined during the month, with respondents indicating that finished products had been delivered to customers upon completion, according to the report.

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