Hanoi (VNA) – Vietnam’s manufacturingsector gained growth pace at the end of the first quarter, with markedincreases in output, new orders and exports, leading to stronger rises inemployment and purchasing activity, according to a report by the London-basedglobal information provider IHS Markit.

In the report on Vietnam Manufacturing PurchasingManagers' Index (PMI) in March revealed on April 1, IHS Markit said businessconfidence in the country also surged to a 20-month high.

The index rose to 53.6 in March, up from 51.6 inFebruary and signalling a solid improvement in the health of the manufacturingsector. In fact, business conditions strengthened to the greatest extent in 27months.

Signs of improving customer demand and success inkeeping the COVID-19 pandemic under control helped to support rises in neworders and output in March.

New business increased for the seventh successivemonth, and at the fastest pace since July 2019. In some cases, clients hadexpanded their order sizes over the month. There were also signs of improvementin international demand conditions, helping lead to the greatest increase innew business from abroad since November 2018.

Production, meanwhile, rose at a much faster pacethan in February, with the rate of growth hitting a 20-month high. Output wasup across all three broad sectors, with consumer goods firms leading theexpansion.
Higher new orders and expanded productionrequirements encouraged Vietnamese manufacturers to increase their staffinglevels and purchasing activity during March.

Employment rose at a modest pace, but still thestrongest since June 2019. Similarly, input buying increased to the greatestextent in 20 months.

On a less positive note, disruption to supply chainscontinued to affect the sector and led inflationary pressures to strengthen.Input costs and output prices rose at the fastest rates in just over three andfour years respectively.

Difficulties sourcing raw materials remained, withsuppliers' delivery times continuing to lengthen. Issues with the importing ofitems, material shortages and a lack of shipping containers all contributed tolonger lead times. That said, vendor performance declined to the least extent infour months and firms were able to expand their stocks of purchases.

Stocks of finished goods also rose, due to acombination of higher production and issues with the delivery of orders.

Shortages of raw materials, often due to theCOVID-19 pandemic, led to a sharp and accelerated increase in input costsduring March. In particular, higher steel prices and increased costs for itemssourced from China were mentioned. The latest rise was the fastest in just overthree years.

Output prices, meanwhile, were raised at thesharpest pace in just over four years as manufacturers passed on higher inputcosts to their customers.

Commenting on the latest survey results, AndrewHarker, Economics Director at IHS Markit, said the Vietnamese manufacturingsector saw growth step up a level in March, with production rising at thefastest pace in 20 months according to the latest PMI data.

Based on the historical relationship between the PMIand official numbers, the latest figures suggest manufacturing productionsecured double-digit growth year-on-year in the first quarter./.