Vietnam’s gross domestic product (GDP
) is likely to grow 5.9% this year, driven by solid growth of the manufacturing sector, said IHS Markit, a global provider of information, analytics and expertise, in a report jointly elaborated with Nikkei released Monday.
The country’s Manufacturing Purchasing Managers’ Index (PMI
), which measures its manufacturing performance, improved to 52.9 in September, marking the strongest rise over the past 16 months, driven by both output and new orders.
According to the report, the rate of growth in manufacturing output picked up to a three-month high in September. Higher production also reflected further strengthening in new orders.
New business increased for the tenth successive month, with the rate of expansion quicker than that recorded in August. The rise was also seen in new export orders.
Growth in new work prompted firms to take on staff in September. Moreover, the rate of job creation was sharp and the fastest in five-and-a-half years.
The rise in employment helped reduce backlogs of work in spite of continued new order growth. Outstanding business fell for the sixth consecutive month.
Vietnamese manufacturers increased their purchasing activity at a sharp pace that was the fastest since May 2015. Firms linked the rise to higher new orders and efforts to build inventory reserves.
The report noted that stocks of both purchases and finished goods rose in September. Pre-production inventories posted a solid increase following the previous month’s joint-survey record, while stocks of finished goods were accumulated for the first time in ten months.
“The standout number from the latest Vietnam PMI survey was the fastest rise in employment for five-and-a-half years as firms responded to sustained new order growth,” said Andrew Harker at IHS Markit, which compiles the survey.
“Higher inventory levels were also registered, with a number of respondents attributing this to efforts to build reserves. This all suggests a level of confidence among manufacturers that output will continue to rise in the near-term at least,” the analyst added.
In a reported released last week, the Asian Development Bank (ADB
) revised down its GDP growth forecast for Vietnam to 6.0% in 2016 and 6.3% in 2017 due to drought in the Mekong and Central Highlands regions and low global commodity prices in the first half of the year.