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Manufacturing, employment growth sends Vietnam’s PMI to four-month high

By Hung Le   May 5, 2019 | 06:52 pm PT
Manufacturing, employment growth sends Vietnam’s PMI to four-month high
A worker at an automotive plant in the northern province of Hai Duong. Photo by AFP/Hoang Dinh Nam
New orders have seen Vietnam’s manufacturing sector generate jobs and maintain growth, an international study finds.

Japanese media giant Nikkei and research firm IHS Markit released a recent report that said growth was maintained in the Vietnamese manufacturing sector during April as firms were successful in securing new orders.

The Nikkei Vietnam Manufacturing Purchasing Managers’ Index (PMI), a composite figure indicating manufacturing sector performance, rose to a four-month high of 52.5 in April from 51.9 in March.

A score of above 50 on the index indicates growth, while that below 50 would mean the sector is contracting.

Firms continued to see new orders rise at a solid pace in April, the same rate as March, both domestically and for exports.

This led to an increase in employment in the first three months, while manufacturing production rose for the seventeenth successive month.

Despite signs indicating cost inflation picking up, Vietnam’s manufacturing firms continued to lower their output prices as part of efforts to boost customer demand, the report said.

Given the four-month high, the report predicts that new orders will increase further over the coming year, helping boost sentiment over production volumes.

Andrew Harker, associate director at IHS Markit, said: "The main positive from the latest survey was a return to employment growth, the first rise in three months, as firms gained confidence that the weak performance at the start of the year is now a thing of the past.

"There was still a reluctance to raise selling prices, however, in spite of a pick-up in the rate of cost inflation, but this will likely change should solid inflows of new work continue in coming months," he added.

Vietnam’s PMI in the first three months of 2019 had fallen to the lowest point in three years, as a result of muted demand and falling employment. The index nevertheless remained above the critical 50-point threshold that separates expansion from contraction in manufacturing output.  

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