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Vietnam's PMI rising against last January
Ngoc Thuy 14:01, 2018/03/02
The Vietnam Manufacturing Purchasing Managers` Index (PMI) edged up to 53.5 in February, from January`s 53.4, indicating a solid improvement in the sector`s health, stated Nikkei Asian Review in a report.
"The Vietnamese manufacturing sector continued its solid start to the year in February," informed Andrew Harker, associate director at HIS Markit which complies the survey, in the report. 
 
Vietnamese business conditions have been strengthened continuously since December 2015.
Vietnamese business conditions have been strengthened continuously since December 2015.
A pick-up in the production growth rate was recorded, thanks to stronger client demand. There was evidence of stock building during the month as manufacturers raised their purchasing activity sharply and preproduction inventories increased at the fastest pace for a year. 

Meanwhile, the rate of input cost inflation remained elevated and firms raised their selling prices again, albeit at a slightly reduced pace.

A PMI reading of above 50 indicates economic expansion, while a reading below 50 points signals contraction. That said, Vietnamese business conditions have been strengthened continuously since December 2015, assessed the report.

"Output rose at the fastest pace in ten months, while the expansion in purchasing activity was the sharpest since the end of 2016," added Harker. 

"This suggests that manufacturers are optimistic regarding the near-term prospects for client demand."

Despite the further growth of new orders, backlogs of work decreased amid reports of efforts to clear outstanding business. Moreover, the rate of depletion was the sharpest in 20 months. 

Employment continued to rise at a solid pace in February, although the rate of job creation eased from that seen in January. Increased employment was mainly linked to higher output requirements.

Alongside higher employment, firms also raised their purchasing activity to support output growth, while efforts to build inventories were also mentioned. The rise in input buying supported a solid increase in stocks of purchases. Meanwhile, stocks of finished goods decreased, but at a marginal pace that was the weakest in the current eight-month sequence of decline. 

A further steep rise in input costs was recorded in February, with the rate of inflation only slightly slower than January's 81-month high. The report mainly attributed higher input prices to rises in raw material costs. There were some reports that suppliers had responded to stronger demand for inputs by raising prices. 

With input prices continuing to increase, manufacturers raised their output charges accordingly. Selling price inflation was recorded for the sixth month running, with the latest rise only slightly slower than at the start of the year. 

Suppliers' delivery times were broadly unchanged over the month. While a reported scarcity of raw materials resulted in longer lead times in some cases, other respondents noted faster deliveries. 

Vietnamese manufacturers remained optimistic that output will increase over the coming year in line with company plans. That said, sentiment dipped to the lowest since last June.

The Vietnamese economy is on track to achieve a high GDP growth rate of 6.7% in 2018, generated by positive socioeconomic performance in January, said Prime Minister Nguyen Xuan Phuc at the government's monthly press briefing on February 2. 

The industrial production index rose by 20.9% compared to the same period of 2017, while industrial processing and manufacturing continue to be the spotlight with a towering growth rate of 23.8%. 

The export value in January was estimated at US$19 billion, up from the US$14.6 billion in the same period last year, indicating a sharp increase of 33.1%, in which the domestic and foreign direct investment (FDI) sectors witnessed increases of 31.6 and 33.7%.
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