Vietnam PMI May 2018


Vietnam: Manufacturing PMI shoots up to 13-month high in May

June 1, 2018

The Nikkei Purchasing Managers’ Index (PMI) reported by IHS Markit climbed to a 13-month high of 53.9 in May, up from 52.7 in April. It remains above the critical 50-point threshold that separates expansion from contraction in manufacturing output. Business conditions have now improved for thirty consecutive months and May’s reading signals a faster pace of expansion in the manufacturing sector.

May’s upturn was driven by faster expansions in output, new orders and employment. New orders increased at the sharpest rate in 14 months in May, especially thanks to a surge in new business from overseas markets since the inception of the survey in March 2011. With new orders on the rise, output expanded at the swiftest pace in three months across all three broad sectors, with growth strongest in investment goods. Manufacturers increased their intake of workers at a faster pace in May as backlogs of work climbed. Input costs rose due to higher fuel costs and rising supplier charges. Firms raised their selling prices to transfer the added burden of cost-adjustment onto consumers. Moreover, business confidence picked up in May, with more than half of the respondents expecting a rise in production over the coming year.

Commenting on the manufacturing PMI for April, Andrew Harker, Associate Director at IHS Markit, stated:

“A record rise in new export orders is the key highlight from the latest Nikkei Vietnam Manufacturing PMI, helping to drive growth across the sector. Output price inflation continued to ease as companies often favoured holding down prices to help secure sales rather than passing on sharp rises in input costs.”

FocusEconomics Consensus Forecast panelists see fixed investment growing 9.6% in 2018, which is up 0.1 percentage points from last month’s forecast. For 2019, the panel estimates growth in fixed investment will moderate to 7.8%.


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Vietnam PMI Chart

Vietnam PMI May 2018 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 IHS Markit

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