At 50.5 in November, up from 48.7 in October, the seasonally adjusted
HSBC Vietnam Manufacturing PMI posted above the neutral 50.0 value for the
first time in 14 months.
Although the index pointed to
only marginal improvements in overall manufacturing business conditions, the
latest figures are the highest since September 2011.
The improvement in operating
conditions reflected returns to growth in both production levels and new orders
during November. Output increased at the most marked pace since September 2011,
thereby ending a seven-month period of contraction.
Support to production levels was
mainly provided by domestic demand in November, as new export order volumes
continued to decline. Survey respondents commented on relatively subdued demand
within Asia and the ongoing economic downturn across Europe. Overall new
business levels nonetheless returned to growth in November, which ended a
six-month sequence of contraction.
Although the latest rise in new
orders was only modest, the rate of expansion was the strongest since April
2011. Backlogs of work decreased for the eighth consecutive month, suggesting a
general lack of pressure on operating capacity across the Vietnam manufacturing
sector.
Another rise in staffing levels contributed
to the latest reduction in outstanding work across the sector. The pace of job
creation picked up slightly since October and was the most marked for a year.
Higher production requirements
and stronger new business inflows resulted in an expansion of input buying for
the first time since March. This did not prevent a 13th successive monthly
decline in stocks of purchases in the manufacturing sector. Anecdotal evidence
suggested that lower pre-production inventory levels reflected
stronger-than-expected output in November.
Improved sales also contributed
to a solid drop in stocks of finished goods, with the rate of decline in
post-production inventories the fastest for a year. November’s data provided
some evidence that price discounting strategies supported new business gains in
Vietnam’s manufacturing sector.
Factory gate prices decreased for
the seventh month running and at the fastest pace since August. Average cost
burdens continued to rise during November, driven by rising oil-related prices.
That said, the rate of cost
inflation eased further from the five-month high registered in September.
Commenting on the Vietnam
Manufacturing PMI survey, Trinh Nguyen, Asia Economist at HSBC said: “The
rebound of manufacturing activity is anticipated and much-needed.
The expansion is supported by
stronger credit growth as well as relatively benign inflation, while export
demand remains weak. Looking ahead, we expect a gradual pick-up of economic
activity supported by both domestic demand and a gradual recovery in China.”
Minh Thien | vir.com.vn
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