Vietnam's new orders rise; fuel employment & output growth: Report

The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) registered 52.5 in September, a fraction lower than the reading of 52.7 in August but still pointing to a solid improvement in business conditions across the sector. Operating conditions have now strengthened in each of the past 12 months.

Likewise, the current sequence of new order growth also extended to a year as new business expanded solidly in September amid reports of improving customer demand. That said, the rate of increase softened from August. This was also the case with regards to new export orders, where some respondents mentioned signs of demand weakness in export markets. The rise in new business from abroad was the slowest in ten months.

With total new orders continuing to increase, manufacturers expanded their production solidly. The rate of growth was broadly in line with that seen in the previous month, S&P Global said in its report.

Employment and purchasing activity each rose solidly again at the end of the third quarter. As well as responding to higher production requirements, firms also increased staffing levels to support new production lines. Capacity expansions enabled firms to keep on top of workloads despite ongoing new order growth, as evidenced by a second successive reduction in backlogs of work.

In line with the picture seen in August, cost pressures were relatively subdued in September, with inflation much slower than recorded earlier in the year. Several respondents indicated that lower oil prices had helped them to reduce their cost burdens, although there were still some reports of higher raw material prices.

Similarly, output prices increased only slightly during the month as some firms took advantage of muted cost inflation to offer discounts to customers.

Meanwhile, suppliers' delivery times were little changed, following an improvement in vendor performance in the previous survey period. Again, this represented a much-improved picture than that seen earlier in the year.

Renewed inventory building was signalled across the manufacturing sector in September. Stocks of purchases increased for the first time in six months, linked to rising new orders and fuelled by higher purchasing activity.

Stocks of finished goods increased for the first time since February, and to the greatest extent in close to a year-and-a-half. Some respondents indicated that finished goods inventories had risen due to sales volumes coming in below expectations during the month.

Hopes for improvements in market demand and new orders, alongside confidence that the COVID-19 pandemic will remain under control, supported optimism in the year-ahead outlook for production. Sentiment strengthened to the highest in four months during September and was above the series average, the report added.

Fibre2Fashion News Desk (KD)