Thanks to the increase in new orders, jobs and purchasing power altogether with the increase in input and output prices leading to the rise of Vietnam’s PMI to 53.4 points, jumping to 9-month high.
According to Nikkei, PMI (Purchasing Managers Index) of Vietnam rose from 52.5 points in December 2017 to 53.4 points in January, showing a sharp improvement of the manufacturing sector.
It is informed by Nikkei that Vietnam’s manufacturing sector has been enjoying convenience with the increase in new orders and jobs. All of this contributed to the improvement in operating conditions at the most significant level since April 2017.
However, it is also proved that there is pressure on the supply chain, where delivery time has been prolonged and the price increase has been strongest since the survey began in early 2011. Output prices also increased faster when companies have to deal with rising input costs and increasing customer demand.
The increasing number of new orders has led to a rise in manufacturing output for the second month in a row. This increase is strong and is the fastest since September 2017.
Companies continue to increase capacity in January, due to which they have to hire more workers. In fact, the employment rate has reached a 16-month high. Additional capacity has helped manufacturers reduce backlog volumes despite new orders.
Manufacturing growth was also supported by a significant increase in purchasing power, the fastest increase in 13 months. At the same time, increasing demand for inputs and scarcity of raw materials have resulted in suppliers' delivery being extended. Delivery time of sellers has extended to the highest level since August 2014.
Material scarcity has also contributed to increase of input costs. Input price growth has been faster and is one of the strongest gains in index history. Output price growth was faster, reaching the year-high.
Purchasing power has increased sharply making pre-production inventories increase for the second month in a row. However, the growth rate is still only mild. In the meantime, stock inventories have fallen as they are used to support sales.
Manufacturers in Vietnam generally expect customer demand to continue to increase in 2018, contributing to production growth. International investment increased and business expansion plans were key factors in increasing output.