New orders rise sharply, close to five-year record

The index results not only showed the health of the manufacturing sector improving for the third consecutive month, but also showed that business conditions had strengthened significantly, in particular, output and new orders rose sharply.

The June order book was second only to the record set in March 2011, according to the survey. Reports showed demand improved as some customers returned to request more orders during the month. New export orders rose at the fastest pace since February 2022. The rapid increase in new orders was matched by a rise in manufacturing output, which posted the strongest increase in output in more than 5.5 years.

New orders have put pressure on operating capacity. In some cases, companies have had to hire more workers, but the hiring is said to be temporary.

New orders increased sharply in June

The report also showed that companies increased their purchasing activity at the fastest pace since June 2022. However, inventories of purchased goods continued to fall; inventories of finished goods fell as businesses sold stocks. Another positive signal was that post-production inventories fell the most in the past three years.

However, the pressure on businesses to increase input costs is also very large. The report shows that the rate of increase in input costs in June continued and this is the third consecutive month of increase and now reaches a high level in the past 2 years. Specifically, transportation costs, oil prices and imported goods costs increased. To compensate, manufacturers increased selling prices at the highest rate in the past 2 years. Notably, the increase in selling prices has been recorded for 2 consecutive months.

Although the delivery process has been gradually shortened, according to S&P Global experts, the improvement in sellers' performance is only small when there are still difficulties in international shipping.

Vietnam’s manufacturing sector returned to activity mid-year, overcoming the relatively modest growth seen in recent months, thanks to a rapid increase in new orders, said Andrew Harker, chief economist at S&P Global Market Intelligence. The sharp increase in new orders has exposed staff shortages at some companies and led to increased workloads.

Recruiting more staff to ensure the progress of new orders, along with the increase in basic salary in July, will increase the cost burden for businesses, especially when increased transportation costs cause input prices to rise to a two-year high.

"Rising inflation could dampen demand in the future, but for now firms will still benefit from a rise in new orders in June," said Andrew Harker.

Source: https://thanhnien.vn/luong-don-dat-hang-moi-tang-manh-gan-sat-muc-ky-luc-5-nam-18524070117363497.htm