Manufacturing sector’s output rises at near-record pace in November
Vietnam’s Manufacturing Purchasing Managers’ Index (PMI) rose from 53.9 points the previous month to reach 56.5 points in November, according to the latest survey from Nikkei’s IHS Markit, released on December 3.
Vietnam’s Manufacturing Purchasing Managers’ Index (PMI) rose from 53.9 points the previous month to reach 56.5 points in November. (Photo: cafef.vn)
Manufacturing business conditions during November improved to one of the greatest heights in the near eight-year survey history.
The consumer goods sector was the strongest performer of the three broad sectors covered in the latest survey period; witnessing the fastest rises in output, new orders, and employment.
New orders increased sharply in November, with the rate of expansion quickening for a second month in a row. Strong growth of new orders encouraged manufacturers to increase production. Moreover, the rate of output growth quickened to the fastest since March 2011.
Output also looks set to increase further over the coming year as strong demand has boosted manufacturers’ confidence. Sentiment jumped from that seen in October and was the highest since February 2016.
Firms responded to greater workloads by taking on extra staff, and at a rapid rate. In fact, the pace of job creation was the fastest in the survey’s history, surpassing the previous record seen in June.
Manufacturers increased their stocks of both inputs and finished goods at record rates as firms responded well to new bigger orders and prepared for likely further rises in sales in coming months. The accumulation of pre-production inventories was helped by a marked acceleration in the rate of purchasing activity growth.
Higher raw material prices resulted in a further increase in input costs in November, and one that was the most marked in three months. Rising cost burdens led manufacturers to increase their selling prices, the first time in three months.
A number of panellists mentioned that material shortages had contributed to higher prices for inputs, with supply issues leading some firms to report longer delivery times for inputs. Other manufacturers reported that their suppliers had been well prepared and reduced waiting times. Overall, vendor delivery times were broadly unchanged.
Andrew Harker, Associate Director at IHS Markit, said that the Vietnamese manufacturing sector continued to defy recent signs of slowing demand elsewhere in the global economy during November, seeing a strong and accelerated increase in new orders and a near-record rise in output. Moreover, firms seem confident that the good news will continue, prompting them to build inventories and take on staff at the sharpest rates seen in the near eight-year survey history so far.
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