Manufacturers hired extra staff to help meet production requirements in April. — VNA/VNS Photo Trong Dat

HCM CITY (Biz Hub) — There was solid improvement in business conditions in the manufacturing sector as improving client demand led to stronger rises in output and new orders, according to the April Purchasing Managers' Index (PMI).

The survey of around 400 manufacturing companies by Markit in co-ordination with HSBC found that higher production requirements led to increases in both employment and purchasing activity.

Meanwhile, there were further falls in both input costs and prices, although in each case the rates of reduction eased.

The headline seasonally adjusted PMI, a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy, rose to 53.5 in April from 50.7 in the previous month, signalling a solid strengthening of operating conditions.

The improvement was the strongest since the series began in April 2011.

Business conditions strengthened in each of the past 20 months.

Driving the overall improvement in business conditions was a sharp increase in new business as a number of firms reported having secured new customers. The rate of expansion was the sharpest in the series history. This was also the case with regard to new business from abroad, where growth was vigorous.

Growth in output resulted in a further reduction in work backlog as firms reported efforts to complete orders quickly, though the rate of depletion was the weakest in a four-month sequence of falling outstanding business.

Manufacturers hired extra staff to help meet production requirements in April. The modest rise in employment followed a decrease in the previous month.

Each month since November input costs decreased. Panellists reported lower costs for raw materials including oil, iron and steel, while some respondents had sought discounts from suppliers.

The latest fall in input costs was the slowest in five months. Decreasing costs was the main factor behind a further reduction in prices by manufacturing firms though the rate of decline fell for the third month running.

Suppliers' delivery times lengthened for the second straight month amid reports of raw material shortages. However, the rate of deterioration in lead times was marginal as prompt payments led some suppliers to speed up deliveries.

An increase in the number of new businesses led to a sharp rise in purchasing activity during April. Input buying rose in each of the last 20 months, with the latest expansion the strongest since April last year. This rise in purchasing led to an accumulation of pre-production inventories, the first in four months.

Stocks of finished goods also increased, following a decline during the previous month. Some panellists reported that finished products were awaiting delivery to clients.

Commenting on the survey, Andrew Harker, senior economist at Markit, said: "Growth of the Vietnamese manufacturing sector stepped up a gear in April, with the latest set of numbers the most impressive in the four-year survey history.

"Central to the improvement was success for firms in securing new clients, helped by a continued lack of inflationary pressure." — VNS