Hanoi (VNS/VNA) - Manufacturing sector returned to growth inSeptember as concerns around the outbreak of the COVID-19 pandemic in thecountry eased. Both output and new orders increased, while business confidencestrengthened, and the rate of job cuts softened.

According to a monthly survey by Nikkei and IHS Markit, the VietnamManufacturing Purchasing Index (PMI) rose back above the 50.0 no-change mark inSeptember, posting 52.2 from 45.7 in August. That pointed to the firstimprovement in business conditions for three months, and the most marked sinceJuly 2019.

Control over the COVID-19 pandemic was a key factor helping to support improvementsin operating conditions, after increasing case numbers had been seen in theprevious survey period.

Reduced case numbers contributed to stronger client demand, leading to a solidincrease in new orders. New business from abroad also increased in September,the first time this has been the case since January.

Solid expansion in production was also registered, helped by higher new orders.In fact, the rise in output was the sharpest in 14 months.

Business confidence also improved at the end of the third quarter of the year,rising sharply from August to the highest since July 2019. Projected growth ofnew orders is expected to lead to increases in output over the coming year, buta number of firms mentioned that positive expectations were based on assumptionsthat the pandemic will remain under control in the country.

Rising new orders encouraged manufacturers to expand their purchasing activityfor the first time in three months, and at a solid pace. This increase inpurchasing contributed to a renewed accumulation of pre-production inventories.Some panelists reported efforts to build reserves.

The rate of input cost inflation quickened to a 22-month high and was broadlyin line with the series average. Panelists often linked higher input prices to supplyshortages for raw materials. This was also a factor behind a lengthening ofsuppliers' delivery times.

In response to higher input costs, firms raised their selling prices for thefirst time in eight months. The rate of inflation was only slight, however,amid ongoing competitive pressures.

Commenting on the latest survey results, Andrew Harker, Economics Director atIHS Markit, said: “After a rise in COVID-19 cases in late-July and early Augustbriefly threw the sector's recovery off track in August, the September PMIresults were much more positive.

"With control of the pandemic regained, firms saw an influx of new orders,ramped up production and were at their most optimistic for over a year. As everthough, sustaining these positive trends is dependent on virus cases notpicking up again."

One new development in the latest survey was a return to growth of new exportorders for the first time since the pandemic began, a welcome signal thatinternational demand is becoming more supportive of the sector's recovery, hesaid.

In a monthly report on the industry and trade sector in the first nine monthsof this year, the Ministry of Industry and Trade (MoIT) said that the domesticindustrial production had prospered in September and is expected to grow againin the last months of the year because the pandemic is basically under control.

According to its statistics, the index of industrial production (IIP) of Vietnamin September increased by 2.3 percent against August and by 3.8 percent overthe same period last year.

The IIP in the first nine months of 2020 rose by 2.4 percent over the sameperiod last year. This rate was lower than the growth rate of 9.6 percent inthe first nine months of 2019.

The ministry said this was the lowest growth rate in many years.

The industry saw a reduction or low growth rates in IIP of some key industrialproducts during the first nine months. Of which, the index decreased by 16.7 percentfor the liquefied gas (LPG); 14.6 percent for beer; 13.7 percent for crude oilexploitation; 11.8 percent for cars; and 9.1 percent for natural gas.

However, there were also a number of industries with a high growth rate in IIPover the past nine months, creating a great contribution to the overall growthof the industry. They included metal ore mining (up by 14.8 percent);manufacturing electronic products, computers and optical products (up by 8.6 percent);and tobacco product production (up by 8.2 percent)./.