AsemconnectVietnam - On March 1, Nikkei announced Vietnam Manufacturing Purchasing managers’ Index or PMI which rose to a 21-month high of 54.2 points in February compared to 51.9 points in January.

Nikkei said Vietnam’s business conditions have strongly improved since May 2015. The health of the manufacturing sector has been enhanced during the last 15 months.

Specifically, Vietnam’s manufacturing sector regained growth momentum in February with productivity and quantity of new orders to swell faster and companies increased inventories at record high speed. Meanwhile, the level of business optimism has been significantly improved. The input price growth rate has slowed down slightly but the recent sharp increase in cost burden has made companies to raise output price faster.

Manufacturing sector’s input hiked for the fourth consecutive month when there are reports showing that the number of new orders increased. Moreover, the output growth has been faster. The output increased in the areas of consumer goods, intermediate goods and basic investment goods.

The total number of new orders rose faster in February with the strongest growth rate since May 2015. The number of new export orders also increased more rapidly in the month as companies reported improved demand from international customers.

The increased number of new orders results in the backlog to swell for the second consecutive month. However, the growth rate was modest and was slower than in January. The increase of new orders also helped improve the number of jobs in February. The latest increase was stronger and faster than the average in the long term. The number of employees inched up over the last 11 months.

The optimism in business significantly improved and reached a high level in a year. The optimism was based on the company’s development plan along with the expectation that customers’ demand continued to rise. This optimism was reflected in the attitude of manufacturers for inventory policy in February. Purchased item inventory rose at the fastest pace in the survey history i.e. six years amid goods purchases were strong and fast.

Inventories of finished goods also rose at the fastest pace since May 2015 in the context of stronger growth in output. Increased input costs remained substantial in February, despite having slowed down slightly compared to early 2017.

Members of survey team said rising raw materials and falling price of dong against US dollar have increased the price of imported goods. In order to cope with rising input costs, companies raised output prices and the increase was the largest in three months.

Commenting on the survey data about Vietnam’s PMI, the survey result collector Markit said: “Some aspects in the report about the latest PMI of Vietnam show that the manufacturing sector’s health has improved at the highest level since May 2015. The increase in the number of new orders was faster, thereby supporting faster productivity growth. Meanwhile, the optimism about the prospects in one coming year has led to increased purchased goods inventory while the number of new orders and purchasing activity put pressure on productivity on both manufacturers and their suppliers”.

The survey team hopes that this may lead to the increase in hiring employees in the upcoming months when companies adjust their operational capacity to suit the workload to be performed. The health of the manufacturing sector will have to create thrust for the entire economy.

Source: Intellasia.net