Vietnam: Manufacturing PMI rises to second highest level in survey's history in November
December 3, 2018
According to data released by Nikkei and IHS Markit, the manufacturing Purchasing Managers’ Index (PMI) rose to 56.5 points in November, up notably from the 53.9 points logged in October and marking the best result since January 2000. The index thus lies further above the critical 50-point threshold that separates expansion from contraction in manufacturing output.
The considerable improvement in business conditions in November was largely due to surging production, which rose at the sharpest pace in over seven years, while new business inflows also grew at a faster clip in the month. Moreover, new export orders growth accelerated, signaling robust external demand. Capacity constraints started to show, however, as backlogs of work increased for the first time in six months. In response, firms ramped up hiring at a record pace, while inventories also rose at a record rate in preparation for future growth.
On the price front, input prices rose in November on higher raw material prices and shortages. Consequently, firms hiked their selling prices.
Commenting on November’s stellar performance, Andrew Harker, associate director at IHS Markit noted:
“The Vietnamese manufacturing sector continued to defy recent signs of slowing demand elsewhere in the global economy during November, seeing a strong and accelerated increase in new orders and a near-record rise in output. Moreover, firms seem confident that the good news will continue”.
Vietnam Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists see fixed investment growing 8.5% in 2019, which is down 0.1 percentage points from last month’s forecast. For 2020, the panel estimates growth in fixed investment will moderate to 7.5%.
Author: Lindsey Ice, Economist