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Wednesday, May 22, 2024

Vietnam Manufacturing PMI above no-change mark for second straight month

By Dat Thanh

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HCMC – The S&P Global Vietnam Manufacturing Purchasing Managers’ Index (PMI) rose fractionally to 50.4 in February from 50.3 in January, staying above the 50.0 no-change mark for two consecutive months.

Both output and new orders slightly increased last month, leading to a rise in employment and an improvement in business confidence.

Employment levels in the sector saw an uptick for the first time in four months, reaching the highest point in a year. However, some firms noted that the new hires were temporary.

Business confidence surged to a one-year high, with nearly 55% of respondents expressing optimism about future output and new order growth.

While the recent growth brings positive aspects like renewed job creation and increased business confidence, manufacturers need to see stronger and sustained growth in new businesses before they can confidently invest in raw materials and adjust their selling prices accordingly,  said Andrew Harker, economics director at S&P Global Market Intelligence.

Despite the overall expansion, caution prevailed in purchasing and inventory management, with firms opting to deplete stock of finished goods and draw down inventories instead of increasing purchasing activity.

The slight increase in selling prices was attributed to higher input costs, particularly in the face of rising transportation expenses. However, the rate of inflation remained marginal, as some manufacturers hesitated to pass on the full cost burden to customers in a competitive environment.

The S&P Global Vietnam Manufacturing PMI is compiled based on responses from around 400 manufacturers and is a key indicator of the sector’s performance, with a reading above 50 indicating growth and below 50 signifying a decrease compared to the previous month.

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