Vietnamese manufacturing business conditions improved to one of the greatest extents in the country’s almost eight-year survey history during November amid strong and accelerated expansions of output and new orders, with the Purchasing Managers’ Index (PMI) marking the strongest growth among ASEAN markets.

The Vietnam Purchasing Managers’ Index (PMI) growth is strongest among ASEAN markets, at 56.5 in November 

According to a report released by Markit today, December 3, only some countries saw operating conditions improve at a quicker rate in November, with Vietnam performing the best of all.

Vietnam’s manufacturing sector recorded the sharpest increase in output in over seven years. The Philippines came second in the rankings, with a solid rate of expansion that was similar to October, followed by Myanmar and Indonesia.

Vietnam’s PMI rose to 56.5 in November, up from 53.9 in October and signaling a sharp monthly improvement in the health of the manufacturing sector. Business conditions strengthened at the second-fastest pace in the survey’s history, second only to the record seen in the first month of data collection.

The consumer goods sector was the strongest performer of the three broad sectors covered in the latest survey period, seeing the fastest rises in output, new orders and employment.

Besides this, new orders increased sharply in November, with the rate of expansion quickening for a second month in a row. New export business, meanwhile, rose at the same marked pace as total new business.

The strong growth in 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 boosted manufacturers’ confidence. Sentiment jumped from that seen in October and was the highest since February 2016.

Andrew Harker, associate director at IHS Markit, which compiles the survey, said: “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 survey’s history to date, the expert remarked.

According to the report, there were signs of capacity pressure returning to the sector as backlogs of work increased for the first time in six months and to the greatest extent since August 2017.

Firms responded to the increased workloads by taking on extra staff 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 raw materials and finished goods at record rates as firms responded to higher numbers of new orders and prepared for further rises in sales in the coming months.

The accumulation of preproduction inventories was helped by a marked acceleration in the growth rate of purchasing activity.

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 for the first time in three months.

SGT