Vietnam: Manufacturing PMI picks up after two months of decline
January 2, 2018
Vietnam’s manufacturing sector picked up the pace of growth in December, reflected by a higher Nikkei manufacturing Purchasing Managers’ Index reading, following two consecutive months of decline. The index rose to 52.5 points in December, up from 51.4 points in November, remaining above the critical 50-point threshold that separates contraction from expansion in manufacturing output, where it has been for two years.
The turnaround at the end of 2017 was brought about by an acceleration in output and new orders fueled by higher demand in both domestic and overseas markets. While output rose at a modest pace in December, following a flat reading in the previous month, new orders climbed at the fastest rate in three months. Despite the upturns, backlogs of work fell for the second month running and inventories declined as goods were produced directly for sale. Firms hired more workers to meet rising output requirements; additional intake of workers rose at the swiftest rate since September. Input prices soared in the month due to shortage-induced cost increases for raw materials, including oil and steel, and price hikes by Chinese suppliers. Firms raised output prices in response to the added cost burden, but the price boost was relatively moderate. Improved client demand spurred a more optimistic outlook on output over the coming 12 months.
Author: Nihad Ahmed, Economist