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Vietnam Manufacturing Returns To Expansion

Vietnam's manufacturing sector grew for the first time in fourteen months in November as both production levels and new orders increased, survey data from Markit Economics showed Monday.

The seasonally adjusted HSBC Vietnam Manufacturing Purchasing Managers' Index rose to 50.5 from 48.7 in October. A reading above 50 indicates expansion in the sector.

Output increased at the fastest rate since September last year, ending a seven-month period of contraction. Domestic demand underpinned output growth as new export order volumes declined further. Relatively subdued demand within Asia and the ongoing economic downturn across Europe were cited as reasons for weak export demand by manufacturers.

Overall orders increased after declining for the previous six months and the rate of increase was the strongest since April last year. Backlogs of work fell for the eighth month in a row. An increase in staffing levels led to the latest reduction in outstanding work across the sector. The pace of job creation rose slightly since October and was the strongest this year.

Improved sales continued to help the depletion of finished goods. Evidence show that price discounting strategies helped in gaining new business. Factory-gate prices eased for the seventh month running at the fastest pace since August.

Cost burdens meanwhile continued to increase due to rising oil prices. That said, the cost inflation eased further from the five-month high seen in September.

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