Vietnam: Manufacturing conditions improve at a more modest pace in January
February 1, 2019
According to data released by Nikkei and IHS Markit, the manufacturing Purchasing Managers’ Index (PMI) fell to 51.9 points in January from 53.8 points in December, on broad-based weakness among the components. The index nevertheless remained above the critical 50-point threshold that separates expansion from contraction in manufacturing output.
The manufacturing sector started the year on a weaker note as new orders and production both softened further from their multi-year highs hit last November. Meanwhile export orders also continued to rise in January, albeit at a more modest pace. In response to incoming new business, firms raised their staff levels, which supported companies’ efforts to reduce backlogs of work. Moreover, inventories rose higher in January and supplier delivery times lengthened. Finally, firms were optimistic in the outlook for the year ahead and expressed expectations of improvements in demand in the short-term.
On the price front, input inflation was subdued in January following December’s decline. Consequently, firms lowered their selling prices again in January.
Commenting on the manufacturing sector’s final performance of 2018, Andrew Harker, associate director at IHS Markit noted:
“While still signalling growth for the Vietnamese manufacturing sector, the latest PMI data highlight that the economy can’t be completely immune from the weakness seen elsewhere in the region and issues with global trade. While these issues persist, therefore, the sector is likely to remain in a softer growth phase.”
Author: Lindsey Ice, Economist