In a report released on May 4, HSBC Bank said the improvement was the strongest since the series began in April 2011. Business conditions have now strengthened in each of the past 20 months.
Higher production requirements supported 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.
Andrew Harker, senior economist at Markit which cooperates with HSBC in the PMI report, said growth of the Vietnamese manufacturing sector stepped up a gear last month, with the latest set of numbers the most impressive in the four-year survey history.
He said in the report that central to the improvement was success for firms in securing new clients, helped by a continued lack of inflationary pressure.
Manufacturers took on extra staff in order to help meet production requirements in April and a modest rise in employment followed a decrease in the previous month.
Besides, higher new orders led to the 19th successive monthly increase in manufacturing, with the rate of expansion quickening to the fastest since April 2011.
Output growth 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.
As has been the case in each month since last November, input costs decreased. Panelists 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. Dropping input prices was the main factor behind a further reduction in charges at Vietnamese manufacturing firms. The rate of decline eased for the third month running.
However, suppliers’ delivery times lengthened for the second month in a row amid reports of material shortages at vendors. 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 panelists reported that finished products were awaiting delivery to clients.