The Viet Nam Manufacturing Purchasing Managers’ Index dropped to 51.6 in March from February’s 10-month high of 53.5, Nikkei’s IHS Markit reported on Monday.
According to the report, business conditions in Viet Nam continued to improve at the end of the first quarter of 2018, although the rate of expansion eased from that seen in February.
The March’s reading signalled a modest improvement in the health of the sector, which was the weakest since November last year. Business conditions have been strengthening in each of the past 28 months.
The data signalled a slight monthly rise in manufacturing output, which was the slowest in the current four-month sequence of expansion.
According to the report, the rise in output was mainly linked to higher new orders. The rate of growth in new business also eased but remained solid amidst reports of improved client demand. The rise in overall new orders was supported by a faster increase in new business from abroad, the most marked since last October.
A slower growth in new orders enabled firms to work through outstanding business again in March. The rate of depletion accelerated to the strongest in three years.
Manufacturers raised their staff level for the 24th successive month in response to higher output requirements. That said, the rate of job creation eased to a seven-month low.
“Although continuing in the growth territory in March, the Vietnamese manufacturing sector saw a softer expansion, particularly with regard to output. New orders continued to rise solidly amidst a strong export performance, providing some optimism that output will continue to rise in near future,” said Andrew Harker, Associate Director at IHS Markit, which compiled the survey.
Although input prices continued to rise sharply in March, the rate of inflation eased markedly from February and was the slowest since August 2017. Where input costs increased, this was linked to higher market prices. Output price inflation also eased amidst competitive pressures. Selling prices have been rising in each of the past seven months.
“There was some respite for companies on the inflation front, with input costs increasing at a much slower pace than was seen in February. It looks, therefore, that inflationary pressures may have peaked around the turn of the year,” Harker said.
Suppliers’ delivery times lengthened marginally, with raw material shortages and shipping delays reportedly behind the deterioration.
In line with the picture for output and new orders, purchasing activity rose at a weaker pace during March. The increase was still solid, however, extending the current sequence of growth to 28 months.
The report showed that inventory holdings were broadly stable during the month. Stocks of purchases had changed little, following three months of expansion, while stocks of finished goods stabilised after eight months of decline. Panellists indicated that slower increases in output and new orders led to caution around stock holdings.
Manufacturers were strongly optimistic that output will increase over the coming year, with sentiment rebounding from February’s eight-month low. More than 55 per cent of the respondents in the survey predicted output to increase. - VNS