Vietnam manufacturing growth climbs to 16-month high in September

Work at a company producing car and motorcycle parts in Vinh Phuc Province in northern Vietnam. Photo by Reuters/Kham

A solid increase in new orders has led to the fastest rise in employment for five and a half years.

Vietnam’s manufacturing activity saw a significant improvement in September with new orders, output and purchasing all rising at faster rates than the previous month.

The headline Nikkei Vietnam Manufacturing Purchasing Managers’ Index, or PMI, a single figure indicator of manufacturing performance, rose to 52.9 in September from 52.2 in August, signaling the best performance since May 2015, according to survey data released by Markit Economics on Monday. Any reading above 50 indicates expansion in the sector.

Companies have linked the rise to more new orders and efforts to build inventory reserves.

New business increased for the tenth successive month, encouraging firms to take on more staff and leading to the fastest rate of job creation in five and a half years.

Manufacturing output increased sharply to a three-month high, reflecting further the increase in new orders.

 

Andrew Harker at IHS Markit, which compiles the survey, said the solid growth suggests that manufacturers are confident that output will continue to rise, at least in the near term.

“The manufacturing sector looks set to help drive GDP growth in 2016,” he said. IHS Markit currently forecasts a rise in GDP of 5.9 percent in Vietnam in 2016.

The World Bank and Asian Development Bank recently lowered its growth forecast for Vietnam to 6 percent after the country’s economy cooled in the first half following the impacts of drought on agricultural production and falling industrial growth.

By VnExpress