Vietnam PMI May 2016


Vietnam: Manufacturing PMI hits 12-month high in May

June 1, 2016

The Nikkei manufacturing Purchasing Managers’ Index (PMI) edged up from 52.3 in April to 52.7 in May, tallying the fastest expansion since May 2015. With this result, the indicator is further 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 solid expansions in new business and output. Higher demand contributed to an expansion in output, which tallied its sixth consecutive increase. New export orders went up in May and resulted in higher staffing and increased purchasing activities by Vietnamese firms. As higher staffing enabled manufacturers to work through outstanding businesses, backlogs of work decreased in May. Regarding price developments, input costs rose due to higher prices for raw materials linked to limited supply. In response to higher input costs, Vietnamese firms raised output prices.

Nikkei stated that, “the latest set of PMI data for Vietnam paint an encouraging picture of the health of the manufacturing sector. The strength of new order growth is the highlight from May’s release and should help lead to further improvements in output and employment in coming months.”

FocusEconomics Consensus Forecast panelists see investment rising 8.9% in 2016, which is unchanged 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 May 2016

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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