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Aug 01, 2018 / 09:13

Vietnam factory activity remains robust in July

The headline Nikkei Vietnam Manufacturing Purchasing Managers` index (PMI) in July remained one of the highest since the survey begin in March 2011.

Vietnam's PMI came at 54.9 in July, down marginally from 55.7 in June, but still notched one of the highest points since the survey started in March 2011, according to Nikkei and IHS Markit. 


A reading below the 50 neutral mark indicates no change from the previous month, while a reading below 50 indicates contractions and above 50 points to an expansion.

The reading showed a rebound in the pace of growth in new export orders to a near-record high, while business conditions have now strengthened in each of the past 32 months, stated IHS Markit, which complied the survey. 

Manufacturing new orders continued to increase at a substantial pace during July, with the rate of growth only fractionally weaker than June's 87- month high. Respondents indicated that the rise in new business was in line with stronger client demand. 

Meanwhile, the rate of growth in new export orders quickened in July and was only slightly slower than May's series record.

According to IHS Markit, higher workloads encouraged manufacturers to increase their staffing levels and purchasing activity during July. 

The rate of job creation was solid, despite easing from June's record high. Meanwhile, input buying rose at a substantial pace amid some reports of efforts to build inventory reserves.

The rate of input cost inflation remained elevated at the start of the third quarter, with panelists linking higher prices to raw material shortages. The passing on of increased input costs to customers resulted in a further monthly rise in output prices, with the rate of inflation little-changed from that seen in June.

Forecasts of further growth of new business over the next 12 months fueled optimism that output will continue to rise. Business confidence picked up from the previous month, with close to 51% of respondents predicting an increase in production.

"The Vietnam manufacturing PMI remained elevated in July as the sector continued to grow strongly. Supporting the overall expansion in the latest survey period was an accelerated increase of new export orders.

Confidence in the future was meanwhile illustrated by efforts by firms to build inventory reserves in order to prepare for further production growth and further solid hiring," said Andrew Harker, associate director at IHS Markit, which compiles the survey.