Vietnam PMI July 2016


Vietnam: Manufacturing PMI drops in July

August 1, 2016

The Nikkei manufacturing Purchasing Managers’ Index (PMI) dropped from June’s 52.6 to 51.9 in July, thus marking a four-month low. Despite the drop, the indicator is resting above the 50-threshold that separates expansion from contraction in business conditions. With the exception of two months in late 2015, the Vietnamese Manufacturing PMI has been in positive territory since September 2013.

The monthly figure reflects a slowdown in output and new orders growth. However, new export orders increased amid improving client demand in July. Backlogs of work in Vietnamese manufacturers dropped for the fourth consecutive month while the rate of job creation eased in July. Regarding price developments, input costs rose on the back of higher prices for commodities while output prices dropped as manufacturers tried to stimulate demand amid strong competition.

According to Andrew Harker at Markit, “there are two ways of looking at the latest PMI data for Vietnam. The glass half full approach would be to note that the sector continues to expand with new business increasing at a solid pace. On the other hand, a less positive view would highlight a loss of growth momentum with slower rises in output, new orders and employment recorded in July. This follows a pattern that has been seen across much of the past year, with growth picking up and then slowing again a few months later, without a sustained period of strong expansion.”

FocusEconomics Consensus Forecast panelists see investment rising 8.9% in 2016, which is down 0.4 percentage points from last month’s forecast. For 2017, the panel expects investment to grow 8.6%.

Author: Jean-Philippe Pourcelot, Economist

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Vietnam PMI Chart

Vietnam PMI July 2016 0

Note: Nikkei Purchasing Managers’ Index. Readings above 50 indicate an expansion in the manufacturing sector while readings below 50 point to a contraction.
Source: Nikkei and IHS Markit

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