AsemconnectVietnam - Vietnam’s PMI increased to 54.7 points in June compared to 50.3 points in May. This result showed that the health of Vietnam's manufacturing industry has improved significantly.

On July 1, 2024, S&P Global announced the Vietnam manufacturing industry Purchasing Managers' Index (PMI) report for June of 2024, including 3 highlights: the number of orders increased the most since March 2011; the number of jobs is growing again and output prices are rising at the fastest pace in two years.
Growth in Vietnam's manufacturing industry accelerated at the end of the second quarter. New orders increased at one of the fastest rates on record, allowing companies to increase production and purchasing activity, and increase headcount for the first time in three months.
Specifically, S&P Global's Vietnam manufacturing PMI increased sharply to 54.7 points in June, compared to 50.3 points in May. The index results did not only show that the health of the manufacturing industry has improved for three consecutive month, but also showed that business conditions have strengthened significantly. In fact, the improvement in operating conditions is one of the two strongest since November 2018, equivalent to the levels recorded in April of 2021 and May of 2022.
The stronger improvement in business conditions mainly reflects the increase in both output and new orders at mid-year.
In particular, the number of new orders increased to a level just below the level recorded in the first month of survey data collection in March of 2011. Reports suggest demand has improved as some customers returned asking for more orders during the month.
In some cases, competitive pricing has helped companies secure new orders. Meanwhile, the number of new export orders increased at the fastest rate since February of 2022, although the growth rate was much slower than the total number of new orders.
The number of new orders increased rapidly in proportion to the increase in production output, and June recorded the strongest increase in output in more than 5 and a half years.
Companies have also increased purchasing activity, and input purchases increased for the third consecutive month at the fastest pace since June of 2022. Even so, purchase inventories continued to decline as input goods were used for production. Similarly, finished goods inventory decreases as inventory items are moved to meet sales demand. Furthermore, post-production inventories fell the most in three years.
Also according to S&P Global, the growth rate of input costs in June increased for the third consecutive month and reached a two-year high. There are reports of rising transportation costs, along with rising oil prices and the cost of imported goods. To compensate, manufacturers increased selling prices to the largest extent since June of 2022. Sales price increases have been recorded for two consecutive months.
Greater availability of raw materials helped suppliers speed up deliveries in June. Delivery times were shortened for the first time in 2024 so far. However, the improvement in performance of sellers is only small when there are still difficulties in international shipping.
The prospect of favorable business conditions continues to support business confidence about the outlook for manufacturing output in the year ahead. Business sentiment hit a three-month high as about half of survey respondents forecast growth.
Commenting on the survey results, Mr. Andrew Harker, Economic Director at S&P Global Market Intelligence, said that Vietnam's manufacturing industry became vibrant again in the middle of the year, overcoming a relatively modest growth period in recent months thanks to a rapid increase in the number of new orders. The sharp increase in new orders has exposed staff shortages in some companies and led to an increase in the amount of work that needs to be done. Faced with that situation, companies have recruited more employees.
Along with strong growth comes the cost burden, especially when rising transportation costs cause input prices to rise to a two-year high. Rising inflation could dampen demand in the future, but for now companies will still enjoy a boost in new orders in June.
CK
Source: VITIC/congthuong.vn