Vietnam: Manufacturing PMI soars to survey-record high in June
July 2, 2018
The Nikkei Purchasing Managers’ Index (PMI) reported by IHS Markit shot up to 55.7 in June from 53.9 in May and was one of the highest readings since the survey began in March 2011. Remaining above the critical 50-point threshold that separates expansion from contraction in manufacturing output, June’s reading reflected improved business conditions in the sector and marked thirty-one consecutive months of expansion.
June’s print represents a sharp improvement in business conditions, underpinned by strong upturns in output and new orders, thanks to stronger client demand. Manufacturing output accelerated, growing at the fastest pace in three months, while the stride in new orders was among the swiftest in survey history. Overall, new business outpaced growth in new export orders. Higher workloads prompted firms to increase their in-take of workers in June, with the rate of job creation speeding up to a survey-record high. Record hiring enabled companies to marginally cut their backlogs of work, despite robust growth in new orders. On the price front, firms faced increased input costs owing to higher oil prices and shortages of raw materials. Manufacturers responded to the upturn in input costs by raising their output prices. Although easing to the lowest in four months in June, business confidence in the sector remained upbeat: rising new business should support growth in output over the coming year.
Commenting on the manufacturing PMI for June, Andrew Harker, Associate Director at IHS Markit, stated:
“The Vietnamese manufacturing sector appears to be motoring midway through 2018, with growth of output and new orders among the fastest seen since the survey began in 2011. The current growth phase has been extremely positive for Vietnamese workers, with firms taking on extra staff at a record pace during June.”
Author: Nihad Ahmed, Economist