The manufacturing sector of Vietnam edged back into expansion in March, with the PMI posting a 23-month high of 5.08.
The figure was contained in the Hong Kong and Shanghai Banking
Corporation (HSBC)’s report on Vietnam’s purchasing managers’ index
(PMI) in March, released on April 1.
March data pointed to modest
recoveries in the levels of both manufacturing production and new
orders, following contractions in the previous month.
Companies
benefited from an improving domestic market, increased promotional
activity and a slight expansion in the level of incoming new export
orders, the bank said.
New export business increased
for the first time in 11 months during March. Manufacturers linked
the latest growth in new export sales to improved demand from
clients in China, Japan and Thailand.
Growth
of new orders and production filtered through to the labour market,
with March seeing employment rise for the fifth time in the past six
months.
Input cost inflation surged higher during March, amid reports of increased prices on international commodity markets.
Part of the increase in input prices was passed on to clients in the
form of higher selling prices. Output rate of contraction charges rose
for the second successive month and at the fastest pace since April
2012. However, the rate of increase in selling prices remained well
below that of input costs.
Vietnam
manufacturers maintained a preference for reduced inventory holdings in
March, leading to further depletion of both raw material and
finished goods stocks. In contrast, purchasing activity was raised for
the second time in the past three months, reflecting increased
production.
Asia Economist at HSBC Trinh Nguyen
said March’s expansion of manufacturing output is consistent with the
bank’s view of a gradual recovery in Vietnam.
The process is
likely to be bumpy, however, she said, adding that what’s most positive
moving forward is a rebound of external demand, which should help
counterbalance weak internal demand in the coming months.-VNA