Vietnam PMI June 2022 – manufacturing purchasing managers index

Cimigo
Jul 01, 2022

Rate of job creation hits three-and-a-half-year high

  • Employment rises on back of higher workloads.
  • Solid increase in output.
  • Inflationary pressures remain elevated.

Cimigo Vietnam market research has collected the Vietnam PMI – manufacturing purchasing managers index since 2013. The Vietnam PMI is compiled by S&P Global from responses to monthly questionnaires sent to purchasing managers in a panel of around 400 manufacturers.

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Vietnam PMI findingsVietnam PMI June 2022

The Vietnamese manufacturing sector ended the first half of 2022 firmly in expansion mode as a lack of disruption from the COVID-19 pandemic supported demand and production. Firms were also increasingly successful in efforts to hire additional staff, with the rate of job creation quickening to a three-and-a-half-year high.

Issues with global shipping and COVID-19 restrictions in Mainland China meant that suppliers’ delivery times continued to lengthen markedly, while inflationary pressures remained elevated. The Vietnam Manufacturing Purchasing Managers’ Index™ (PMI®) posted 54.0 in June, down slightly from 54.7 in May but still signalling a solid monthly improvement in the health of the sector. Business conditions have now strengthened in each of the past nine months. 

Further marked increases were seen in both output and new orders at the end of the second quarter, as relative market stability due to a lack of pandemic disruption enabled demand to grow. Rates of expansion were particularly pronounced in the consumer goods category. Meanwhile, the growth of new export orders quickened to the fastest pace in four months, despite some reports that shipping difficulties had limited opportunities to export.

Rising new orders encouraged manufacturers to expand workforce numbers again during June, extending the current sequence of increasing staffing levels to three months. Furthermore, firms were increasingly successful in their efforts to recruit extra staff and the rate of job creation quickened to the fastest in three-and-a-half years. Increased staffing capacity enabled firms to keep on top of workloads, with backlogs reduced for the second time in the past three months. Meanwhile, the shipping of finished items to customers meant that post-production inventories decreased again in June.

Vietnam PMI Trend June 2022

Input costs continued to rise sharply, with the rate of inflation quickening from that seen in May. A range of factors added to cost burdens, according to panellists, most notably higher gas and oil prices. Rising charges for shipping and freight and higher raw material prices were also mentioned. Higher costs for energy and shipping, in particular, were behind a further increase in selling prices. The rate of inflation softened, but was still marked and well above the average since the series began in March 2011.

Continued supply-chain disruption was also a feature of the latest survey, although lead times lengthened to a lesser extent than in May. Where delivery delays were reported, firms linked this to COVID-19 lockdowns in Mainland China, shipping issues, price rises and material shortages. A further solid rise in purchasing activity was registered in June as firms responded to higher new orders. These purchased inputs were often used to directly support production, meaning that stocks of purchases continued to fall slightly.

Manufacturers expect the pandemic to remain under control, leading to stable market conditions and increasing production over the next 12 months. More than half of all respondents predicted a rise in output, with confidence above the series average.

Approach

The S&P Global Vietnam Manufacturing PMI® is compiled by S&P Global from responses to monthly questionnaires sent to purchasing managers in a panel of around 400 manufacturers. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP.

Survey responses are collected by Cimigo Vietnam in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses.

The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.

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