HSBC Purchasing Managers Index 2015

Embargoed until: 09:00 (Ho Chi Minh City) 4 May 2015

HSBC Vietnam Manufacturing PMI

Sharpest rise in output in four years
Key findings:
Sharp growth of production
Record rise in new business
Input costs continue to fall
April PMI data pointed to a solid improvement in business
conditions in the Vietnamese manufacturing sector as improving
client demand led to stronger rises in output and new orders.
Higher production requirements led to increases in both
employment and purchasing activity. Meanwhile, further falls in
both input costs and output prices were recorded, although in
each case rates of reduction eased.
The headline seasonally adjusted Purchasing Managers Index
(PMI) a composite indicator designed to provide a singlefigure snapshot of operating conditions in the manufacturing
economy rose to 53.5 in April from 50.7 in the previous month,
thereby signalling a solid strengthening of operating conditions.
Moreover, the improvement was the strongest since the series
began in April 2011. Business conditions have now strengthened
in each of the past 20 months.
Driving the overall improvement in business conditions was a
sharp increase in new business as a number of firms reported
having secured new customers. The rate of expansion was the
sharpest in the series history. This was also the case with regards
to new business from abroad, where growth was solid.
Higher new orders led to a nineteenth successive monthly
increase in manufacturing production, with the rate of expansion
quickening to the fastest since April 2011. Growth of output
resulted in a further reduction in backlogs of work as firms
reported efforts to complete orders quickly. That said, the rate of
depletion was the weakest in the current four-month sequence of

falling outstanding business.

Manufacturers took on extra staff in order to help meet production
requirements in April. The modest rise in employment followed a
decrease in the previous month.
As has been the case in each month since last November, input
costs decreased. Panellists reported lower costs for materials
including oil, iron and steel, while some respondents had
requested price reductions from suppliers. The latest fall in input
costs was the slowest in five months. Decreasing input prices
was the main factor behind a further reduction in charges at
Vietnamese manufacturing firms. That said, the rate of decline
eased for the third month running.
Suppliers delivery times lengthened for the second month in a
row amid reports of material shortages at vendors. That said, the
rate of deterioration in lead times was only marginal as prompt
payments led some suppliers to quicken their deliveries.
Increases in new business led to a sharp rise in purchasing
activity during April. Input buying has now risen in each of the
past 20 months, with the latest expansion the strongest since
April last year. This rise in purchasing led to an accumulation of
pre-production inventories, the first in four months.
Stocks of finished goods also increased, following a decline in
the previous month. Some panellists reported that finished
products were awaiting delivery to clients.

HSBC Vietnam Purchasing Managers Index (PMI)

HSBC Vietnam Purchasing Managers Index (PMI)
50 = no change on previous month, S.Adj.

55

Increasing rate of growth

HSBC Vietnam Purchasing Managers Index

50
45
40

Increasing rate of contraction

2011

2012

2013

2014

The HSBC Vietnam Manufacturing Purchasing Managers Index (PMI) is a composite indicator designed to provide an overall view of activity in the manufacturing sector and acts as
a leading indicator for the whole economy. The indicator is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers delivery times
and stocks of goods purchased. A reading of the PMI below 50.0 indicates that the manufacturing economy is generally declining; above 50.0, that it is generally expanding. A reading
of 50.0 signals no change. The greater the divergence from 50.0, the greater the rate of change signalled by the index. Purchasing Managers Index and PMI are either registered
trade marks of Markit Economics Limited or licensed to Markit Economics Limited. HSBC use the above marks under licence. Markit is a registered trade mark of Markit Group Limited.

HSBC Vietnam Manufacturing PMI

Output Index
Q. Please compare your production/output this month with the situation one month ago.
50 = no change on previous month, S.Adj.

Increasing rate of growth

60

% L o w er
% H ig h er

55
50
45
40

Increasing rate of contraction

2011

2012

2013

% S am e

2014

Vietnamese manufacturing output rose sharply during April. Moreover, the rate of expansion was the fastest since April 2011. Production has now
increased in each of the past 19 months. Where output rose, panellists mainly linked this to growth of new orders amid improvements in customer
demand.

New Orders Index

Q. Please compare the level of new orders received (Vietnam and export) this month with the situation one month ago.
50 = no change on previous month, S.Adj.

Increasing rate of growth

60

% L o w er
% H ig h er

55
50
45
40

Increasing rate of contraction

2011

2012

2013

% S am e

2014

Stronger client demand was also mentioned by those firms seeing a rise in new business during April, with a number able to secure new customers
over the month. New orders increased for the eighth successive month, and the rate of expansion quickened to the strongest in the history of the
survey which began in April 2011.

New Export Orders Index

Q. Please compare the level of new export orders received this month with the situation of one month ago.
50 = no change on previous month, S.Adj.

Increasing rate of growth

55

% L o w er
% H ig h er

50

45

40

Increasing rate of contraction

2011

2012

2013

2014

% S am e

New export orders also increased at a series-record pace during April, surpassing the previous best seen in April 2014. New business from abroad
has now risen in seven of the past eight months. Around 31% of respondents signalled an expansion of new export orders, against 15% that posted
a contraction.

Backlogs of Work Index

Q. Please compare the level of outstanding business in your company this month with the situation one month ago.
50 = no change on previous month, S.Adj.

Increasing rate of growth

55

% L o w er

% H ig h er

50

45

40

Increasing rate of contraction

2011

2012

2013

2014

% S am e

Backlogs of work at Vietnamese manufacturing firms decreased for the fourth successive month in April, despite a sharp increase in new orders.
That said, the rate of depletion was the weakest in this sequence. Some panellists reported having made efforts to complete work quickly in an
attempt to avoid an increase in outstanding business.
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4 May 2015

Stocks of Finished Goods Index

Q. Please compare your stocks of finished goods (in units) this month with the situation one month ago.
50 = no change on previous month, S.Adj.

Increasing rate of growth

55

% L o w er

% H ig h er

50

45

40

Increasing rate of contraction

2011

2012

2013

% S am e

2014

Stocks of finished goods increased in April, after having decreased in the previous month. Although modest, the rate of accumulation was the
strongest in eight months. According to respondents, post-production inventories had risen as some finished products awaited delivery to customers.
Close to 22% of panellists reported higher stocks of finished goods, against 18% that signalled a fall.

Employment Index
Q. Please compare the level of employment at your unit with the situation one month ago.
50 = no change on previous month, S.Adj.

Increasing rate of growth

55

% L o w er

% H ig h er

50

45

Increasing rate of contraction

2011

2012

2013

% S am e

2014

April data pointed to a modest increase in employment at manufacturing firms in Vietnam. This followed a decrease in the previous month and was
the seventh instance of job creation in the past eight months. Where staffing levels were raised, this was linked by panellists to higher production
requirements amid new order growth.

Output Prices Index

Q. Please compare the average price that you charge per unit of output (volume weighted) this month with the situation one month ago.
50 = no change on previous month, S.Adj.

Increasing rate of inflation

70

% L o w er

% H ig h er

60

50

40

Increasing rate of deflation

2011

2012

2013

% S am e

2014

As has been the case in each month since October 2014, output prices in the Vietnamese manufacturing sector decreased in April. That said, the
pace of reduction eased for the third month running to the slowest in six months. Respondents mainly attributed lower output prices to declines in
material costs. Meanwhile, some panellists reported that the recent weakness of the euro meant that they had to reduce their prices in the eurozone
in order to remain competitive.

Input Prices Index

Q. Please compare the average price of your purchases (volume weighted) this month with the situation one month ago.
50 = no change on previous month, S.Adj.

Increasing rate of inflation

90

% L o w er

% H ig h er

80
70
60
50
40
30

Increasing rate of deflation

2011

2012

2013

% S am e

2014

A sixth consecutive monthly decline in input costs was recorded during April. According to panellists, falling prices in world markets for items such
as oil, iron and steel had been behind the latest reduction. There were also reports of companies requesting price cuts from suppliers. However, the
rate of decline eased for the third month running.

4 May 2015

Suppliers Delivery Times Index

Q. Please compare your suppliers delivery times (volume weighted) this month with the situation one month ago.
50 = no change on previous month, S.Adj.

Increasing rate of shortening

% S lo w er

55

% F aster

50

45

40

Increasing rate of lengthening

2011

2012

2013

% S am e

2014

Suppliers delivery times lengthened for the second successive month in April, although the rate of deterioration in vendor performance was only
marginal and weaker than seen in March. Where lead times were reported to have lengthened, this was attributed to material shortages at suppliers.
On the other hand, some panellists mentioned that quick payments and company requests had led to shorter delivery times.

Quantity of Purchases Index

Q. Please compare the quantity of items purchased (in units) this month with the situation one month ago.
50 = no change on previous month, S.Adj.

Increasing rate of growth

60

% L o w er

55

% H ig h er

50
45
40
35

Increasing rate of contraction

2011

2012

2013

% S am e

2014

Vietnamese manufacturing firms increased their purchasing activity during April, extending the current sequence of expansion to 20 months.
Moreover, the rate of expansion was solid, having accelerated to the fastest since April last year. The main reason for the latest rise in input buying
was increased new business.

Stocks of Purchases Index

Q. Please compare your stocks of purchases (in units) with the situation one month ago.
50 = no change on previous month, S.Adj.

Increasing rate of growth

55

% L o w er

% H ig h er

50

45

40

Increasing rate of contraction

2011

2012

2013

% S am e

2014

Increased input buying led to an accumulation of stocks of purchases during April, ending a three-month sequence of declining pre-production
inventories. That said, the increase was only slight as some firms used stocks in the production process. More than 22% of respondents signalled
a rise in stocks of purchases, compared with 15% that registered a fall.

Notes on the Data and Method of Presentation

The Purchasing Managers Index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in around 400 manufacturing companies.
The panel is stratified geographically and by Standard Industrial Classification (SIC) group, based on industry contribution to Vietnam GDP. Survey responses reflect the change,
if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the Report shows the percentage reporting
each response, the net difference between the number of higher/better responses and lower/worse responses, and the diffusion index. This index is the sum of the positive
responses plus a half of those responding the same.
The Purchasing Managers Index (PMI) is a composite index based on five of the individual indexes with the following weights derived from the Chartered Institute of
Purchasing & Supplys survey of the UK economy: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the
Delivery Times index inverted so that it moves in a comparable direction.
Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading
above 50 indicates an overall increase in that variable, below 50 an overall decrease. Markit do not revise underlying survey data after first publication, but seasonal
adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

Warning
The intellectual property rights to the HSBC Vietnam Manufacturing PMI provided herein are owned by or licensed to Markit Economics Limited. Any unauthorised use, including but
not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markits prior consent. Markit shall not have any liability, duty or obligation for or
relating to the content or information (data) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit
be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers Index and PMI are either registered trade marks of Markit
Economics Limited or licensed to Markit Economics Limited. HSBC use the above marks under license. Markit is a registered trade mark of Markit Group Limited.

All Intellectual Property Rights owned by Markit Economics Limited