Manufacturing sector strengthens for 23 successive months.
The Nikkei Vietnam Manufacturing Purchasing Managers’ Index (PMI) was at 52.6 in July from 52.2 in June, signaling further improvements in business conditions in the manufacturing sector, according to latest report from Nikkei and Markit Economics.
The health of the sector has now strengthened in each of the past 23 months. Supporting the stronger improvement in business conditions were sharper expansions in output, new orders and employment, according to the report.
Total new business increased solidly as a result of greater customer demand. On the other hand, new export orders decreased for the second successive month.
Growth of total new orders led manufacturers to raise production, extending the current sequence of expansion to 22 months. “The pace of the increase in output during July was solid and faster than in the previous month,” the report added.
Some firms reported having made efforts to reduce outstanding business in July, with others mentioning spare capacity. As a result, backlogs decreased for the second month running.
Meanwhile, the prompt delivery of products to customers contributed to a marginal reduction in stocks of finished goods.
Growth of new orders and a related rise in production requirements led Vietnamese manufacturers to take on extra staff, with the rate of job creation quickening from that seen in June. “Firms have raised employment continuously since April,” the report wrote.
Manufacturers also increased their purchasing activity, with the rate of expansion among the sharpest in the series’ history. Despite this, stocks of purchases decreased as items were used in the production process.
Input prices decreased for the first time in three months as panelists reported that suppliers had reduced their prices. Lower input costs and competitive pressures led to another reduction in prices charged by Vietnamese manufacturers.
Output prices have now decreased in each of the past ten months. Suppliers’ delivery times lengthened fractionally in July. While panelists suggested that some suppliers had reacted positively to requests for faster deliveries, others indicated that shortages of materials had contributed to longer lead times.