Vietnam's Purchasing Managers' Index (PMI) recorded 49.4 in August against July's 48.5 and is the best reading since April.

While remaining below the 50 mark, Vietnam's August PMI signals a marginal deterioration of manufacturing operating conditions.

Released by the Hong Kong and Shanghai Banking Corporation ( HSBC) on Tuesday, the latest data showed that new export orders continued to decline. The marginal fall was the third in successive months. Export market conditions were reported to have remained tough, but were showing signs of stabilization.

Manufacturing production volumes fell for a fourth month in succession during August, said the bank, adding that the decline was linked to a fall in new orders.

Employment rose in August for the first time since April with the rate of growth solid and the sharpest in the survey history. Recruitment reflected positive forecasts for production and orders.

Commenting on the Vietnam's PMI, Trinh Nguyen, Asia Economist at HSBC, said that the country's manufacturing activity continues to be hammered by weak external demand and sluggish domestic conditions, although the pace of contraction is significantly reduced.

Global demand is expected to pick up towards year-end thanks to a recovery from the United States, the eurozone, Japan and China. This should help the manufacturing sector. However, with input prices rising and domestic conditions still weak, the recovery process in Vietnam continues to be bumpy, said Nguyen.

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