Manufacturing Continues Recovery – VnExpress International

The new index also points to the fourth consecutive month of growth, according to a report by British research firm IHS Markit.

The IHS Markit Vietnam Manufacturing Purchasing Managers’ Index measures the performance of the manufacturing sector and is derived from a survey of 400 companies.

The index is based on five individual indices with the following weightings: new orders (30%), production (25%), employment (20%), delivery times from suppliers (15%) and inventory of purchased items (10 %), with the delivery time index reversed so that it moves in a comparable direction.

A reading above 50 indicates an expansion in the manufacturing sector from the previous month; below 50 represents contraction; while 50 indicates no change.

Production and new orders grew at higher rates in the first month of the year as customer demand continued to improve. In each case, the rate of expansion was the fastest in nine months. Total new orders were supported by further improvement in new business from overseas, with the fastest growth rate since November 2018, IHS Markit said in its January report for Vietnam.

Companies were also increasingly confident about production prospects for the year ahead, although optimism hinges to some extent on containing the pandemic. About 60% of those polled expected an increase in production, with general optimism the strongest in more than three years.

There were other signs that inflationary pressures have become less pronounced than for much of 2021. Input costs rose at the second slowest pace in seven months, while producer price inflation fell to its lowest level since last September.

According to respondents, a key driver of rising input costs was rising freight and international shipping costs. Shipping issues and continued disruptions caused by the pandemic led to longer delivery times from suppliers earlier in the year.

A second successive increase in employment was recorded in January, as companies continued to rebuild their workforce after the delta wave of the pandemic in 2021. The rate of job creation accelerated compared to that observed in December, but remained only modest as some employees were on Covid leave and others had yet to return from their hometowns.

Commenting on the latest survey results, Andrew Harker, Chief Economics Officer at IHS Markit, said: “Vietnamese manufacturers are off to a strong start in 2022, with no widespread restrictions meaning the industry has been able to grow despite a relatively high case of Covid-19 Companies were also increasingly confident about the outlook for the year ahead.

“The pandemic, however, continues to impact the industry, including through staff absences, while the possibility of a sharp increase in cases due to the Omicron variant could lead to even more disruption,” he said. -he declares. Another headwind remains shipping issues, which have affected deliveries from suppliers and companies’ ability to deliver to customers, while increasing costs. »

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