Manufacturing sector grows in September

The PMI is a composite indicator offering a snapshot of the manufacturing industry’s operating conditions. September’s 51.5 improves on August’s 49.4 and is the best reading since April 2011.

HSBC said record rises in new business and employment drove the PMI’s surge.

 New business growth was solid, reflecting more positive underlying demand from domestic and foreign clients. Improved product quality and competitive pricing—demonstrated by six successive months of output charge declines—also helped to support sales growth.

New export business rose at a series record pace. For the first time in four months, new export sales increased.

This encouraged the Vietnamese manufacturing sector’s observed payroll expansions as companies sought to keep on top of their workloads.

Work backlogs continued to abate during September, their eighteenth consecutive month of doing so. But the rate at which work outstanding reduced was the slowest seen since April.

Stocks of finished goods rose slightly. Manufacturers were able to add to stocks, reduce backlogs, and manage more new orders while maintaining generally stable output.

September’s input cost inflation stayed steady. Despite easing from August’s high, average cost rises were still marked, and competitive pressures continued to squeeze profit margins.

Demand for inputs was also higher in September. Purchasing activity increased for the first time since April in line with rising new orders and positive demand projections.

HSBC Asia Economist Trinh Nguyen said the PMI reading exceeding 50.0 reflects stronger global demand for Vietnamese goods and the stabilisation of domestic conditions.

“We expect output to pick up in the second half of 2013 thanks to predicted recoveries in the Eurozone, China, the US, and Japan,” she said. “Internal demand is still lacklustre. While prices rose in the third quarter, we believe inflationary pressures will remain contained.”