The PMI is above 50 points, indicating an increase in new export orders.

On the morning of September 4th, S&P Global released its Vietnam Manufacturing Purchasing Managers' Index (PMI) report. The report highlighted three key points: production and new orders continued to increase significantly; inflationary pressures eased; and employment declined for the first time in three months.

S&P Global assesses that Vietnamese manufacturers continued to see increases in output and new orders midway through the third quarter. Although growth in each of these indicators slowed from near-record levels in July, the pace of growth remained strong and resulted in the most significant increase in purchasing activity in over two years.

However, a less positive point is that employment declined for the first time in three months. Although both input costs and output prices continued to rise in August, reports of competitive pressures indicated that the pace of price and cost increases slowed considerably during the month.

The improvement in the health of the manufacturing sector has shown that output and new orders continue to rise, and the corresponding growth rates remain strong, although they have slowed compared to the exceptionally high rates recorded in June and July.

Improved customer demand has led to an increase in new orders, and companies have increased production accordingly. In some cases, the relative stability of prices has helped companies secure new orders, while other reports point to an improvement in international demand. The number of new export orders has increased for the fifth consecutive month.

The report indicated that relatively stable prices were also reflected in input cost and sales price data. While both figures continued to rise, the rate of increase slowed significantly compared to July, marking the weakest increase in four months.

Some manufacturers reported rising raw material prices, but the rate of increase slowed amid competitive pressures. Meanwhile, falling oil prices reduced transportation costs in some cases.

A sharp increase in new orders and easing cost pressures prompted manufacturers to significantly increase their purchasing activity in August. Notably, the rate of increase accelerated for the fourth consecutive month and reached its fastest pace since May 2022.

Another positive development is that purchased input goods are often used directly in production, thus further reducing purchased inventory. Finished goods inventory also decreases as completed products are shipped to customers to fulfill order requirements.

Vietnam's manufacturing sector scored 52.4 points in August, down from 54.7 points in July but still showing strong improvement. Photo: VNA

In contrast to purchasing activity, manufacturers reduced jobs for the first time in three months as layoffs and temporary contract terminations occurred. The workforce reduction, coinciding with an increase in new orders, led to a continued rise in backlogs throughout August.

Supplier delivery times shortened for the third consecutive month, although the reduction was only minor amid some reports of delays in international shipments. Manufacturers remain optimistic that output will increase next year, with expectations of continued improvement in customer demand and an increase in new orders.

Commenting on Vietnam's manufacturing sector in August, Andrew Harker, Director of Economics at S&P Global Market Intelligence, said: "As expected, Vietnam's manufacturing output and new orders slowed from the exceptionally high levels recorded in June and July. These increases are always difficult to sustain, and the growth rate remains significant, so there is little reason to be concerned about this aspect."

The expert pointed out that the positive aspect lies in inflation-related factors, as both input costs and output prices increased much less significantly in August. In fact, this is believed to be a contributing factor to the sustained increase in new orders.

"Overall, the manufacturing sector continues to have a strong second half of the year so far, with a lot of work to be done in the coming months," observed the Director of Economics at S&P Global Market Intelligence.

Source: https://congthuong.vn/thang-82024-pmi-tren-nguong-50-diem-luong-don-dat-hang-xuat-khau-moi-tang-343302.html