Vietnam PMI February 2016


Vietnam: Manufacturing PMI eases in February and approaches 50-point threshold

March 1, 2016

The Nikkei manufacturing Purchasing Managers’ Index (PMI) ticked down from 51.5 in January to 50.3 in February. Despite the drop, the indicator remains 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 softer expansions of output, new orders and employment. The slowdown in output led to a reduction in stocks of finished goods as firms used inventories to fulfill new orders. New orders increased for a third month and contributed to an accumulation of outstanding business. Input costs, on the other hand, dropped for the eighth consecutive month as commodities prices remain subdued and caused a further decrease in output charges. February’s drop was the fastest in three months.

Nikkei stated that, “the Vietnamese manufacturing sector saw growth weaken in February as fragile global demand conditions hampered efforts to sustain the momentum gained at the start of the year. Reflecting this, a number of firms favoured the running down of stocks to new purchasing or production. Meanwhile, costs continued to fall sharply on the back of lower prices for commodities, particularly oil.”

FocusEconomics Consensus Forecast panelists see investment rising 9.6% in 2016, which is unchanged from last month’s forecast. For 2017, the panel expects investment to grow 9.2%.

Author: Jean-Philippe Pourcelot, Economist

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Vietnam PMI Chart

Vietnam PMI February 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 Markit

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