December's survey showed a second successive monthly increase in inventories of input purchases, while there was also an increase in stocks of finished goods. — Photo baohaiquan

HCM CITY (Biz Hub) — Viet Nam's manufacturing sector continued to show signs of strengthening during December, recording the most improvement in eight months. Growth was supported by stronger gains in output and new orders, whilst companies continued to add to their payroll numbers at a solid rate.

The latest Vietnam Manufacturing PMI survey also showed emerging deflationary pressures, with both input and output prices continuing to fall at faster rates. The headline seasonally adjusted purchasing managers' index (PMI) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – recorded 52.7 in December, up from November's 52.1 and the highest reading since April. Growth has now been registered for 16 months in a row.

The upturn in operating conditions stemmed primarily from strengthened growth in output and new orders. Improving customer demand led to higher volumes of new work and subsequently production. Output and new work both rose to their highest levels in eight months.

December's survey indicated that demand improved from both domestic and international sources. New export business rose at a solid rate that was little changed from November's seven-month high.

With higher production requirements, companies continued to increase their purchasing during December. Moreover, the rate of growth accelerated to the sharpest since April as companies also sought to rebuild stock in anticipation of further production growth.

December's survey showed a second successive monthly increase in inventories of input purchases, while there was also an increase in stocks of finished goods. Companies reported that delayed delivery of completed goods led to a build-up of stock in warehouses.

Mild capacity pressures were evident in December as backlogs of work increased for a second successive month. Companies responded by adding to their staffing levels for a fourth consecutive month, with the rate of growth solid, despite easing to the lowest since September.

On the price front, December's survey data indicated that average input costs paid by Vietnamese manufacturers continued to fall. Companies reported that supplier prices, shipping costs and the price of fuel had all fallen when compared to November. Average input prices declined to the greatest degree since July 2012. — VNS