Vietnam’s month-on-month growth rate of manufacturing output in July was second highest on record, behind only March 2011, according to data tracker S&P Global.

“A further substantial rise in new orders led manufacturers to ramp up production, with the rate of growth quickening to a near-record high,” the company said in its latest report on Vietnam’s manufacturing.

The country’s Purchasing Managers’ Index in July was at 54.7, unchanged from June, and the last time growth was faster was in November 2018.

A PMI of above 50 indicates an expansion in manufacturing purchase compared to the previous month.

“New orders increased for the fourth month running in July, with the rate of expansion only slightly slower than the near-record posted in June.”

S&P linked this to stronger market demand and an increase in customer numbers.

New export orders also rose, but some firms reported that export demand had been hampered by high shipping costs.

To fulfill a surge in demand, firms needed to dip into existing stockpiles to help meet new order requirements. Stocks of finished goods were depleted to the second-largest degree on record, behind only that seen in February 2014.

Firms expanded capacity by increasing both their purchasing activity and employment at the start of the third quarter. While input buying rose markedly, staffing levels increased only modestly and at a softer pace than in June.

Input costs continued to shoot up during July, with the pace of inflation marginally weaker than the two-year high seen in June.