Vietnam Manufacturing PMI Index Increases Strongly

On the morning of August 1, 2024, S&P Global released the Vietnam Manufacturing Purchasing Managers' Index (PMI) report for July 2024, with three highlights: output increased at the fastest rate since March 2011; purchasing activities and employment increased and finished goods inventories decreased to near record levels.

The strong growth in Vietnam's manufacturing sector in June continued in July. New orders continued to rise sharply, prompting manufacturers to increase output, and the rate of growth accelerated to near record highs.

However, new orders rose so strongly that firms used up finished goods inventories at one of the highest levels on record, despite efforts to boost employment and input purchases. Meanwhile, input costs and output prices continued to rise markedly, and inflation eased slightly from June.

The last time the PMI was higher than 54.7 was November 2018, S&P Global said. Significant improvements were seen across all consumer, intermediate and investment goods sectors. New orders rose for the fourth straight month in July, and the pace of growth was only slightly slower than the near-record pace in June.

Where new orders rose, panellists attributed this to stronger market demand and an increase in client numbers. New export orders also rose, although to a weaker extent than overall new orders. Some firms said that export demand was affected by high transport costs.

In July, the PMI continued to maintain a high level of 54.7 points, the same as June, thanks to the number of new orders continuing to increase strongly, causing manufacturers to increase production. Photo: MH

Manufacturers increased output sharply in July amid a strong increase in new orders. Moreover, the rate of output growth was faster than in June and was the second fastest on record, after the first month of data collection, March 2011. Despite the strong increase in output, firms still needed to use existing inventories to meet new orders.

In fact, finished goods inventories fell to the second-lowest level on record, behind only February 2014.

Firms attempted to increase capacity by increasing both purchasing and employment at the start of the third quarter. Input purchases increased significantly and at the fastest pace since May 2022. On the other hand, staff numbers rose only marginally and at a slower pace than in June. Meanwhile, backlogs of work increased for the second month in a row.

Commenting on Vietnam's July PMI, Andrew Harker, Chief Economist at S&P Global Market Intelligence, said that the fact that Vietnam's manufacturing sector was able to continue its strong growth momentum from June into July adds to optimism that we are entering a period of good growth that will help push the economy forward.

Source: https://congthuong.vn/thang-7-chi-so-nha-quan-tri-mua-hang-pmi-nganh-san-xuat-viet-nam-tang-manh-336157.html