Manufacturing PMI inches up in August

 

The Nikkei manufacturing Purchasing Managers’ Index (PMI) climbed up from July’s 51.9 to 52.2 in August, reflecting a modest improvement in the operating conditions in the manufacturing sector. The indicator has remained above the 50-threshold that separates expansion from contraction in business conditions since September 2013, with the exception of two months in late 2015.

August’s result reflects decelerations in production and new business, which were offset by a strong rise in employment. Investment goods producers were able to increase their output, unlike manufacturers of intermediate and consumer goods, who saw their production shrink. To reduce the backlog of work, manufacturers increased the number of employees at the fastest rate since December 2013. Regarding price developments, input costs rose on the back of higher prices for commodities while manufacturers had to decrease their output prices.

According to Andrew Harker at Markit, “the latest PMI data for Vietnam are something of a mixed bag again. The data are generally positive, with rates of expansion in employment and stocks of purchases particularly strong. On the other hand, output and new orders increased at weaker rates, suggesting that client demand is showing signs of softening. Adding to this picture is the fact that firms often had to offer discounts in order to secure new work.”

Focus Economics Consensus Forecast panelists see investment rising 8.9% in 2016, which is unchanged from last month’s forecast. For 2017, the panel expects investment to grow 8.7%.

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Note: Nikkei Purchasing Managers’ Index. Readings above 50 indicate an expansion in the manufacturing sector while readings below 50 point to a contraction.

(September 1, 2016)

Vietnam Economic Outlook

 

The Vietnamese economy shifted into a lower gear this year as adverse weather conditions damaged a large share of agricultural output, which accounts for almost 20% of GDP. The economy grew 5.6% on an annual basis in Q2, which was broadly stable compared to Q1 but represents a clear deceleration from the growth rate tallied in Q2 2015. Against the backdrop of a slowing economy, Prime Minister Nguyen Xuan Phuc announced in late July that the government will continue to push forward measures aimed at supporting businesses and spurring domestic demand to reach the country’s yearly growth target of 6.7%. He nevertheless added that the government will not implement measures that could cause the economy to overheat, as happened in 2011, when inflation spiked and the currency depreciated sharply. This suggests that the government is also considering lowering the growth forecast to avoid these past mistakes.

Vietnam Economy Data

2011 2012 2013 2014 2015
Population (million) 87.8 88.8 89.7 90.6 91.6
GDP per capita (USD) 1,373 1,754 1,894 2,032 2,036
GDP (USD bn) 121 156 170 184 186
Economic Growth (GDP, annual variation in %) 6.2 5.2 5.4 6.0 6.7
Consumption (annual variation in %) 4.1 4.9 5.2 6.1
Investment (annual variation in %) -7.8 1.9 5.3 9.3
Industrial Production (annual variation in %) 13.5 4.8 5.9 7.5 9.8
Unemployment Rate 3.6 3.2 3.6 3.4 3.3
Fiscal Balance (% of GDP) -0.5 -3.4 -4.7 -4.4
Public Debt (% of GDP) 46.7 48.5 52.4 55.5
Money (annual variation in %) 12.1 34.9 4.4 17.7
Inflation Rate (CPI, annual variation in %, eop) 18.1 6.8 6.0 1.8 0.6
Inflation Rate (CPI, annual variation in %) 18.6 9.3 6.6 4.2 0.6
Inflation (PPI, annual variation in %) 18.4 9.3 5.3 3.3 -0.3
Policy Interest Rate (%) 15.00 9.00 7.00 6.50 6.50
Exchange Rate (vs USD) 21,034 20,840 21,095 21,388 22,485
Exchange Rate (vs USD, aop) 20,663 20,874 21,029 21,198 21,929
Current Account (% of GDP) 0.2 6.0 4.6 5.1 0.5
Current Account Balance (USD bn) 0.2 9.3 7.7 9.4 0.9
Trade Balance (USD billion) -8.9 2.0 0.4 0.8 -4.1
Exports (USD billion) 95.4 114 133 150 162
Imports (USD billion) 104 112 133 149 166
Exports (annual variation in %) 33.1 20.0 16.5 12.6 7.9
Imports (annual variation in %) 24.4 7.9 18.2 12.3 11.3
International Reserves (USD) 13.5 25.6 25.9 34.2
External Debt (% of GDP) 44.0 38.0 38.5 39.0

(August 23, 2016)

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