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Vietnam's PMI in June increased sharply to 54.7 points, and the number of new orders increased rapidly

Vietnam's PMI index in June increased sharply to 54.7 points, compared to 50.3 points in May, showing that the industrial production sector recovered very strongly.

According to a report from S&P Global, the Purchasing Managers' Index™ (PMI) of Vietnam's manufacturing industry increased sharply to 54.7 points in June from 50.3 points in May, showing that The recovery is solid and no longer "fragile".

Production growth in the final month of the second quarter was driven by new orders increasing at one of the fastest rates on record. As a result, companies were able to increase production and purchasing activity and increase employee numbers for the first time in three months.

The growth rate of input costs is also faster, reaching a two-year high as transportation costs and especially oil prices increase. To compensate, companies increased sales prices at the fastest pace since June 2022.

The index results not only show that the health of the manufacturing sector improved for the third consecutive month, but also show that business conditions have strengthened significantly. The improvement in business conditions in June was one of the two strongest since November 2018, equivalent to levels recorded in April 2021 and May 2022.

New orders increased sharply

The stronger improvement in business conditions mainly reflects the increase in both output and new orders at mid-year. In particular, the number of new orders increased to a level just below the level recorded in the first month of survey data collection in March 2011.

Reports suggest demand has improved as some customers returned asking for more orders during the month. In some cases, competitive pricing has helped companies secure new orders.

Meanwhile, the number of new export orders increased at the fastest rate since February 2022, although the growth rate was much slower than the total number of new orders. The number of new orders increased rapidly in proportion to the increase in production output, and June recorded the strongest increase in output in more than 5 and a half years.

Mr. Andrew Harker, Economic Director at S&P Global Market Intelligence, assessed that Vietnam's manufacturing industry became vibrant again in the middle of the year, overcoming the relatively modest growth in recent months thanks to the number of New orders increased rapidly.

The sharp increase in new orders has exposed staff shortages in some companies and led to an increase in the amount of work that needs to be done. Faced with that situation, companies have recruited more employees.

"However, along with strong growth comes the burden of increased costs, especially when rising transportation costs cause input prices to rise to a two-year high. Rising inflation could reduce demand in the future. future, but for now companies will still enjoy an increase in new orders in June,” said Mr. Andrew Harker.

The sharp increase in new orders has put pressure on operating capacity, leading to a second increase in backlog in three months. Although only mild, the pace of increase was the strongest since January. In some cases, companies said a lack of workers contributed to an increase in uncompleted work.

As a result, the number of employees increased for the first time in three months, and the growth rate was strong. However, in some cases, the new hire is only for temporary work. Companies have also increased purchasing activity and input purchases increased for the third consecutive month and at the fastest pace since June 2022.

The growth rate of input costs in June increased for the third consecutive month and reached a two-year high. There are reports of rising transportation costs, along with rising oil prices and the cost of imported goods. To compensate, manufacturers increased selling prices to the largest extent since June 2022.

Sales price increases have been recorded for two consecutive months. Greater availability of raw materials helped suppliers speed up deliveries in June, and delivery times were shortened for the first time in 2024 so far.

However, sellers' performance improvement is only small when there are still difficulties in international shipping. The prospect of favorable business conditions continues to support business confidence about the outlook for manufacturing output in the year ahead. Business sentiment hit a three-month high as about half of survey respondents forecast growth.



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