Vietnam: Manufacturing PMI falls in July but remains in expansionary territory
August 1, 2017
The Nikkei Manufacturing Purchasing Managers’ Index (PMI) reported by IHS Markit fell to 51.7 in July from 52.5 in June. The result remains above the critical 50-point threshold that separates expansion from contraction, but signals a slowdown in the pace of expansion in the manufacturing sector.
Output growth eased in July as new orders increased at a slower rate. As a result, manufacturers’ purchasing activity rose at a more subdued pace. Nevertheless, backlogs of work picked up, recording the fastest rise in more than six years, and depleted stocks of finished goods as inventories were used to meet new orders. Consequently, firms continued to hire more workers in July, although the speed of job creation was relatively stable from the previous month. Moreover, input cost inflation moderated to the weakest rate in over a year, easing firms’ cost burdens and prompting them to reduce their output prices. Business sentiment rose as more than half of the survey respondents predicted an increase in output going forward owing to expected higher demand and planned expansions.
Author: Nihad Ahmed, Economist