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Vietnam - Manufacturing output expands at fastest pace since 2011

03 January 2014

Vietnam's manufacturing sector improved in December as output and employment increased as a result of renewed order growth, according to survey data from Markit Economics.

The headline seasonally adjusted Purchasing Managers' Index rose to 51.8 in December from 50.3 in November. The above-50 reading signalled a fourth successive monthly improvement in operating conditions. The index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in around 400 manufacturing companies on five of the individual indices of new orders, output, employment, suppliers' delivery times, and stock of items purchased.

New orders increased for the third time in the past four months during December. Growth of new orders led firms to raise their production. Output increased for the third month running, and at the sharpest pace since April 2011.Rising workloads had a positive impact on employment in December, with the rate of job creation picking up to the strongest in three months.

Commenting on the Vietnam Manufacturing PMI survey, Trinh Nguyen, Asia economist at HSBC said: "The manufacturing sector continues to punch its weight in stabilizing growth in Vietnam. The rise of the new orders sub-index is a sign of gradually rising domestic demand, albeit slowly. The new export orders index improved slightly but external demand was still a drag."

"We expect demand for employment and quantity of purchases to offset sluggish growth in other sectors. We expect 2014 to be a slightly better year, with the manufacturing sector providing an anchor," said Nguyen.

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