Vietnam: Manufacturing PMI ticks down to nearly three-year low in February
March 1, 2019
According to data released by Nikkei and IHS Markit, the manufacturing Purchasing Managers’ Index (PMI) edged down to a 35-month low of 51.2 points in February from 51.9 points in January, on muted demand and falling employment. The index nevertheless remained above the critical 50-point threshold that separates expansion from contraction in manufacturing output.
The manufacturing sector continued to weaken in February, despite stronger new orders growth and output. Although both new business inflows and production increased in February, they remained below the robust levels seen last year. The main drag on the headline print was firms’ first reduction in employment in almost three years, as companies shed workers due to softer demand growth compared to last year. In tandem with signs of weaker growth in the region, new export orders eased to an over three-year low in February. Moreover, stocks of purchases fell for the first time in 11 months, as firms scaled back purchasing activity markedly. Despite lower staff levels, firms worked through backlogs of work at the fastest pace in nearly a year.
Turning to prices, input cost inflation rose marginally in February but remained well below the series’ average. In light of soft price pressures, firms lowered output prices for the fifth time in the last six months in order to spur new business.
Finally, despite deteriorating conditions, firms remained optimistic about the outlook for production and new business, although confidence fell to a four-month low.
Author: Lindsey Ice, Economist