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Vietnam PMI August 2019

Vietnam: Manufacturing PMI falls in August

According to data released by IHS Markit, the manufacturing Purchasing Managers’ Index (PMI) fell from 52.6 in July to 51.4 in August. However, the index was still above the critical 50-point threshold that separates expansion from contraction in manufacturing output. August’s reading is a sign that the manufacturing sector is not immune to external downside risks—chiefly U.S.-China trade tensions—although Vietnam’s PMI reading still compares favorably to those of ASEAN peers.

August’s fall came on the back of slower growth in new orders and output, although firms continued to raise employment levels. Input price inflation was modest, while output prices continued to decline.

According to Andrew Harker, Associate Director at IHS Markit: “While Vietnam is one of the countries seen as able to gain from trade diversion and companies setting up new operations there, the reduction in trade flows resulting from the current tensions can still make work harder to come by. That said, the resilience of the Vietnamese manufacturing sector should not be underestimated. We have seen slowdowns such as that recorded in August before during the current sequence of growth, and rates of expansion have always then rebounded in the following months.”

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