The Vietnamese manufacturing sector continued to grow at the end of the first quarter as a faster rise in new business spurred a continued expansion of output, a Nikkei report said.
The headline Nikkei Vietnam Manufacturing Purchasing managers’ Index (PMI) – a composite single-figure indicator of manufacturing performance – ticked up to 50.7 in March from 50.3 in the previous month, signaling a further modest monthly improvement in the health of the sector. Business conditions have now strengthened in each of the past four months.
Andrew Harker at Markit, which compiles the survey, said the Vietnamese manufacturing sector posted a solid but unspectacular performance in March, as has been the case throughout the first quarter of the year. There were positive signs on the order front, however, as there was positive growth.
Meanwhile, the recent run of falling input costs came to an end, but firms are still able to benefit from a relatively weak inflationary environment to maintain their competitive position, he said.
Supporting the latest improvement in operating conditions was a faster rise in new business amid reports of stronger customer demand. New export orders increased at a sharper pace during the month. Both total new business and new export orders have increased continuously since the final month of 2015.
Higher new orders contributed to an increase in manufacturing output, the fourth in as many months. The rate of expansion was little changed from that seen in February. Sector data suggested that growth was driven by consumer goods producers as output fell elsewhere.
After decreasing in each of the previous eight months, input costs rose in March. Some panelists reported that suppliers had increased their prices over the month, according to the report.
Stronger cost pressures led to the slowest fall in output charges in the current 18-month sequence of deflation. However, competition and further falls in some raw material costs led to the continued decline of output prices.
Manufacturers in Vietnam increased their purchasing activity in March in line with higher new orders. Despite this, reports of continued spare capacity at suppliers led to a first shortening of delivery times since last November.
Besides, stocks of purchases continued to fall at Vietnamese manufacturing firms as inputs were used in the production process. The rate of depletion slowed since February.
Stocks of finished goods also decreased, and to the greatest extent in 25 months. Anecdotal evidence linked this to the delivery of products to clients and the use of inventories to help fulfill orders.
Source: The Saigon Times
Keywords: New business, orders, pick up, in March
