Business confidence in Vietnam hits 41-month high: S&P

Vietnam's production in February increased at the fastest pace in over a year-and-a-half amid a sharper increase in new orders, as business confidence hit a 41-month high, according to S&P Global.

Stronger rises in both employment and purchasing activity were also recorded, the company, which provides market data, analytics, and credit ratings, wrote in a release on Monday.

Andrew Harker, economics director at S&P Global Market Intelligence, commented that the Vietnamese manufacturing sector was able to build on the growth seen in January with an even stronger performance in February.

"Firms have thus seen a positive start to 2026, and they are at their most confident about the future for almost three-and-a-half years," he noted in the release.

Most of the key variables from S&P Global's survey pointed to stronger growth, including output, new orders, employment and purchasing activity. Export conditions remained generally muted, however, with new business from abroad unchanged since January.

"The stronger demand environment has resulted in building inflationary pressures, both in terms of firms' own costs and the prices they are charging their customers. Data in the months ahead will need to be watched closely to see if these price increases start to limit demand," he added.

The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) rose to 54.3 in February, up from 52.5 in January and reaching a four-month high. The PMI signalled a solid monthly improvement in the health of the sector, extending the current sequence of strengthening business conditions to eight months.

Manufacturing production increased rapidly in February, with the rate of expansion quickening to a 19-month high.

The ramping up of production helped lead to the smallest reduction in stocks of finished goods in just over two years. That said, post-production inventories still decreased slightly as products were shipped to customers.

An improved demand scenario also contributed to a marked increase in new orders. New business rose for the sixth successive month, and at the fastest pace since last October.

The expansion in total new orders was recorded despite new export business remaining unchanged from the previous month, with some respondents noting instability ininternational markets.

Nonetheless, the rise in total new orders and associated increase in production requirements led to sharper expansions in both employment and purchasing activity midway through the opening quarter of 2026.

Staffing levels rose for the fifth month running, and at a solid pace that was the fastest since September 2022. That said, a number of respondents noted that additional workers had only been hired on a temporary basis. Extra capacity helped firms to reduce backlogs of work solidly during the month.

Meanwhile, the latest increase in input buying was the second-sharpest for a year-and-a-half (behind December 2025 data). In turn, stocks of purchases increased following a fall in January, although the accumulation was only fractional.

Suppliers' delivery times lengthened modestly again in February, with some respondents indicating that they faced customs delays when importing goods. Stronger demand for inputs meant that suppliers were able to raise their prices during February.

As a result, manufacturers' input costs increased at a sharp pace that was the fastest since June 2022. In addition to higher supplier charges, some firms also noted rising shipping costs.

With operating expenses increasing sharply, manufacturers raised their selling prices accordingly. The rate of inflation was unchanged from the 45-month high seen at the start of 2026.

Improving market demand and the prospect of continued new order growth meant that Vietnamese manufacturers were increasingly optimistic that output will rise over the coming year. Moreover, February saw business confidence strengthen for the fifth consecutive month to the highest since September 2022.

Amid a volatile global economy, Vietnam continues to stand out as an attractive destination for foreign direct investment. Assessments by the ADB, SingCham, UOB and Coca-Cola Vietnam indicate that FDI will continue to play a crucial role in driving Vietnam's economic growth over the next five years, which will be "significant" and "more sophisticated".

According to Bruno Jaspaert, chairman of EuroCham, Vietnam is steadily repositioning itself within the global supply chain. Beyond being a cost-competitive manufacturing base, the country is increasingly viewed as a strategic value-chain partner, supported by its favorable geopolitical location, a young and dynamic workforce, and an expanding network of new-generation free trade agreements.

"This evolution provides a strong foundation for Vietnam to attract not only more foreign investment, but higher-quality, value-added capital flows in the years ahead," he wrote in article for The Investor.