Vietnam Manufacturing Rebound in March

According to the survey, Vietnam's production witnessed growth again in March. Seasonally adjusted, Vietnam’s PMI by HSBC exceeded the average point of 50 in March, reaching a 23-month high rate of 50.8 points. Although the PMI growth rate is quite low, it is still the second highest level in the two years of data collection.

 

Data in March showed that both output and new orders rebounded modestly, after the decline in the previous month. Companies benefiting from improved market conditions in the country have increased advertising activity and slightly increased the number of new export orders in the future.

 

New export orders in March increased for the first time in 11 months. Manufacturers assume that recent export sales growth is thanks to increasing demand from customers in China, Japan and Thailand.

 

The increase in the number of new orders and output has affected the labour market. Specifically, the labour supply in March increased for the fifth time in the past six months. However, there is still reserve production capacity in the March survey, while the backlog continues to decrease. The amount of incomplete work went down in 12 consecutive months, although the level of reduction of the recent period is the lowest.

 

Input cost inflation increased rapidly in March, which is reflected in the report on the kinds of prices on the international commodities market. Vietnamese manufacturers reported that purchase cost reached the highest level since September of last year. Inflation rates rose back above the average in the history of the survey.

 

Part of the increase in input prices has been passed on to customers in the form of higher prices. Output prices rose for a second month in a row, at the fastest pace since April 2012. However, the sales growth rate is lower than the rate of input cost. Some companies believe that it is due to the weak market conditions and strong competition.

 

Vietnamese manufacturers maintained low inventories in March, which led to the reduction of raw materials and finished goods. Meanwhile, buying activity has increased for the second time in three months, reflecting increased production activities.

 

Commenting on the survey on PMI ™ in Vietnam, Trinh Nguyen, an Economic Officer of HSBC, said: "The increase in manufacturing output in March is consistent with our view of the gradual recovery in Vietnam. Nevertheless, this process seems to still face difficulties. The positive point in the near future is that foreign demand rebounds will help counterbalance the demand weakness within the country in the coming months."