Vietnam’s index of industrial production (IIP) recorded a year-on-year rise of 9.13% in the first six months of this year, according to the General Statistics Office (GSO)’s latest report.
Vietnam’s index of industrial production (IIP) records a year-on-year rise of 9.13 percent in the first six months of this year. Photo: VNA
The index was lower than 10.3 percent seen in the same period last year but higher than 7 percent and 5.4 percent in the corresponding periods of 2016 and 2017, respectively.
The processing and manufacturing sector, which accounts for nearly 80 percent of domestic industrial production, reported the strong IIP increase of 11.2 percent – a highlight that led the growth of not only the sector but also the whole economy in the period, according to GSO Director Nguyen Bich Lam.
Meanwhile, the IIP growth of electricity production and distribution stood at 10.6 percent and that of water supply and waste-sewage treatment sector and mining sector reached 7.8 percent and 1.8 percent, respectively.
Some industries achieved high production growth in the first half of this year, such as coke coal and refined mining products (70 percent), metal (40 percent), ore exploitation (18 percent), motor vehicles (12 percent) and textile and garment (11 percent).
Among key industrial products with strong IIP increases included crude iron and steel (60 percent), petroleum (58 percent), paint (15 percent), feed for aquaculture (14 percent) and handsets (14 percent), according to the GSO.
From January to June, a number of localities that posted significant growth in IIP like the northern port city of Hai Phong with 25 percent and three other provinces of Quang Ninh, Vinh Phuc and Hai Duong in the north with 14 percent, 13 percent and 10 percent, respectively.
Others were the southern province of Dong Nai with 9 percent while the two largest economic hubs of Hanoi and Ho Chi Minh City lagged behind, recording IIP rises of nearly 8 percent.
According to GSO statisticians, in addition to accelerating production, the industrial sector needs to speed up local consumption of goods in the latter half of this year as the inventory index of the processing and manufacturing sector remained at 75 percent in the first six months, much higher than the safe inventory index at about 65 percent.
June completed a solid second quarter for the Vietnamese manufacturing sector, with business conditions improving amid the ongoing growth of new orders.
A survey by Nikkei and IHS Markit released on July 1 showed the Vietnam Manufacturing Purchasing Managers’ Index (PMI) was 52.5 in June, up from 52.0 in May and in line with the reading from April. The average PMI reading for the second quarter of 2019 was above that seen in the opening three months of the year, albeit remaining short of the 2018 average.
According to the survey, Vietnamese manufacturers continued to record solid growth of new orders in June, with the rate of expansion ticking up to a six-month high. Panellists linked the latest rise to the launch of new products and increased customer numbers. Less positive data was seen with regards to new export orders, which rose at the slowest pace since February. There were some reports that US-China trade tensions had negatively impacted export orders.
The higher number of new orders was the key factor leading to a nineteenth successive monthly rise in manufacturing production in Vietnam. The rise in output was solid, and broadly in line with those seen during the rest of the second quarter.
The continued new order growth led to a rise in backlogs of work in June, the first in 2019 so far. Firms responded to higher workloads by taking on extra staff, reversing the decline seen in May.
“The Vietnamese manufacturing sector continues to bob along nicely midway through 2019. The second quarter of the year saw solid growth that was broadly stable across the period and an improvement on the first quarter,” said Andrew Harker, Associate Director at IHS Markit, adding that ongoing strength in demand encouraged firms to fill positions that had been vacated by resigning staff in May, leading to a return to job creation.