Hanoi (VNA) – Vietnam’s manufacturing sector continued to expandduring January-March with signs of higher growth in March, according to a reportfrom IHS Markit.

The Nikkei Vietnam Manufacturing Purchasing Managers’ Index (PMI), a compositesingle-figure indicator of manufacturing performance, posted 51.9 points inMarch, up from 51.2 in February and signaling an improvement in the health ofthe sector for the 40th successive month. Although registering belowthe 2018 average, the PMI was comfortable above the 50.0 no-change mark at theend of the first quarter.

The sector saw its March output increase at the fastest pace since Novemberlast year while total new business and exports also rose more quickly than inFebruary. However, employment continued to decline marginally. Meanwhile, therate of input cost inflation remained relatively weak, providing scope forfirms to lower their output prices.

Neworders rose for the 40th month in a row during March amid increasedcustomer numbers and growth of new export business. Moreover, the rate ofexpansion in total new orders was the fastest in three months.

The rate of growth in manufacturing quickened for the second consecutive month,and was slightly faster than that seen for new business. This enabled firms toreduce their backlogs of work and add to stocks of finished goods.

The increase in output was recorded in spite of a slight reduction in staffinglevels in March. Panellists suggested that employee resignations had hamperedtheir efforts to expand workforce numbers in response to greater workloads.

As has been the case throughout 2019 so far,inflationary pressures remained muted in the sector at the end of the firstquarter. Input costs rose marginally and at a pace that was well below theseries average. This lack of pressure on costs meant that firms were again ableto offer discounts to customers. Charges decreased for the fourth consecutivemonth, albeit fractionally.

Vietnamese manufacturers responded to higher outputrequirements by increasing their purchasing activity sharply, with the rate ofexpansion the fastest year-to-date. Stocks of purchases decreased, however, asinputs were used to support production growth. The fall in input inventorieswas the second in as many months.

Meanwhile, suppliers’ delivery time was shortened for the first time in overtwo years, following broadly unchanged vendor performance in February.

Almost half of all respondents to the latest surveypredict output to increase over the coming year. Strong optimism reflectedexpected improvements in market demand and investment in expanding productivecapacity. These factors are forecast to help firms meet their plans for higheroutput. Confidence in March was higher than in February and broadly in linewith the series average.

Commenting on the Vietnamese PMI survey data, Andrew Harker, Associate Directorat HIS Markit said: “While still some way short of the strong growth ratesrecorded last year, the manufacturing PMI data for March suggest thatVietnamese firms have weathered the recent slowdown in global trade and wereable to continue to secure greater new order volumes and expand production. IHSMarkit currently forecasts industrial production to grow 8.2 percent in 2019,with PMI data suggesting that the manufacturing sector will continue tocontribute positively to this.”-VNA