Vietnam's purchasing managers' index (PMI) rose back above the 50.0 no-change mark during September to record 51.5. That was an improvement on August's 49.4 and the best reading since April 2011, the first month such survey data were available.

Released by the Hong Kong and Shanghai Banking Corporation on Tuesday in Vietnam's southern Ho Chi Minh City, the September's survey of Vietnamese manufacturers provided positive news on the health of the sector.

New orders and employment both increased at survey record rates, while there was a marked gain in foreign sales. There were reports that underlying economic conditions were improving, supporting demand and raising market activity.

New export business also rose at a series record pace. September was the first time in four months that an increase in new export sales had been registered.

Backlogs of work continued to decline in September. Latest data marked the 18th consecutive month that work outstanding has been cut. However, the degree to which backlogs were depleted was the slowest seen since April.

Stocks of finished goods rose slightly in September. Manufacturers were able to add to stocks, reduce backlogs and cope with a rise in new orders while maintaining a broadly stable level of output.

Commenting on the September survey, Trinh Nguyen, Asia Economist at HSBC, said that the above 50.0 PMI reading is reflective of improved global demand for Vietnamese goods as well as a stabilization of domestic conditions.

"While we expect output to pick up in the second half of 2013 thanks to an expected recovery in the Eurozone, China, the United States and Japan, internal demand is still lackluster. While prices rose in the third quarter, we expect inflationary pressures to remain contained," she said.

The HSBC Vietnam PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in around 400 manufacturing companies on five individual indexes of new orders, output, employment, suppliers' delivery times and stock of items purchases. Endi

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