HCMC – The Vietnamese manufacturing sector continued its robust growth in July, driven by a substantial rise in new orders, according to the S&P Global Vietnam Manufacturing Purchasing Managers’ Index (PMI).
The July PMI remained steady at 54.7, indicating the further strengthening of business conditions.
New orders increased for the fourth consecutive month, with the growth rate only slightly below the near-record levels seen in June. This rise in new business was attributed to stronger market demand and an increase in customer numbers. New export orders also grew, albeit at a slower pace due to high shipping costs.
Despite the sharp rise in output, manufacturers had to use existing stockpiles to meet the new order requirements. Stocks of finished goods were depleted to the second-largest degree on record. Firms increased their purchasing activity and employment to expand capacity, with input buying rising markedly. However, staffing levels increased modestly and at a slower pace than in June.
Input costs and output prices continued to rise sharply, with inflation easing only slightly from June. Rising raw material and shipping costs were the main contributors. Manufacturers increased their selling prices for the third month running in response to these higher costs.
Andrew Harker, economics director at S&P Global Market Intelligence, noted the optimism in the sector, stating, “The Vietnamese manufacturing sector’s sustained strong expansion adds to optimism for a good spell of growth that will drive the wider economy forward. The main issue for firms is keeping up with demand, necessitating an expansion of workforce numbers and securing additional materials.”
Expectations for continued new order growth supported confidence in future production, though sentiment eased to the lowest level since January. About 40% of respondents expressed optimism for the coming year.
The S&P Global Vietnam Manufacturing PMI is a monthly index that measures the performance of the Vietnamese manufacturing sector. It is compiled from responses to questionnaires sent to purchasing managers at some 400 Vietnamese manufacturing companies.
The index ranges from 0 to 100, with a reading above 50 indicating an expansion in the sector compared to the previous month, and a reading below 50 showing a contraction.
