Hanoi (VNS/VNA) – Vietnam’s Manufacturing Purchasing Managers’ Index(PMI) posted 51.4 in August, remaining above the 50.0 no-change mark, butfalling from 52.6 in July to signal a weaker overall improvement in businessconditions.

Accordingto the latest survey released by Nikkei and IHS Markit on September 3, in fact,the health of the sector strengthened to the least extent since February.Growth softened in the Vietnamese manufacturing sector during August as slowerclient demand and the impacts of US-China trade tensions restricted new ordersand production.

“Theslowdown in growth in August, and panellist reports of the US-China tradetensions harming demand, show that the Vietnamese manufacturing sector is notimmune to the impacts of global trade issues. While Vietnam is one of thecountries seen as able to gain from trade diversion and companies setting upnew operations there, the reduction in trade flows resulting from the currenttensions can still make work harder to come by,” Andrew Harker, associatedirector at IHS Markit, which compiles the survey, said.

"Thatsaid, the resilience of the Vietnamese manufacturing sector should not beunderestimated. We have seen slowdowns such as that recorded in August beforeduring the current sequence of growth, and rates of expansion have always thenrebounded in the following months. This could therefore be the case again as2019 draws to a close,” Andrew said.

Accordingto the survey, business sentiment also took a step back in the latest surveyperiod. That said, the sector remained in expansionary territory for theforty-fifth month running.

Meanwhile,input costs rose only marginally and at the slowest pace in seven months,enabling ongoing reductions in selling prices.

Weaknessin August was centred on investment goods producers, where operating conditionsworsened. This contrasted with further improvements in the consumer andintermediate goods sectors. This pattern was repeated with regards to output,new orders and employment.

The rateof growth in manufacturing output was the weakest in the current 21-monthsequence of expansion during August. While rising new orders supportedincreased production at some firms, others reported softer client demand andreductions caused by US-China trade tensions.

Thesefactors were also linked to a slowdown in new order growth. New businessincreased at a solid pace, but one that was the weakest since January.Meanwhile, new export orders rose modestly for the second month running.

Manufacturerssupported ongoing increases in production by raising their purchasing activityand employment levels. Job creation was recorded for the fourth time in thepast five months.

As wellas supporting current output requirements, some respondents indicated thatinput buying had been raised to help build inventories. Consequently, stocks ofpurchases were also up.

Improvedoperating capacity and slower new order growth enabled firms to work throughoutstanding business in August. Backlogs decreased for the first time in threemonths.

The rateof input cost inflation eased for the fourth consecutive month, with inputprices up only marginally midway through the third quarter. Firms weretherefore able to lower their selling prices without greatly impacting profitmargins. Charges decreased for the ninth successive month, albeit fractionally.

Suppliers'delivery times lengthened for the first time in four months, with panellistsgenerally attributing delivery delays to material shortages at vendors.

Finally,business confidence dropped to a six-month low and was below the seriesaverage. Companies were still confident that output would rise over the comingyear, however, with optimism reflecting expectations of improving customerdemand.-VNS/VNA