Vietnam's manufacturing production increases for first time in 3 months

Manufacturing production in Vietnam grew for the first time in three months during March, and to the largest degree since August last year amid renewed increases in both output and total new orders, according to S&P Global.

That said, international demand weakened, and firms were cautious around hiring and purchasing as business confidence softened, the firm said in a release on Tuesday.

"Meanwhile, the rate of input cost inflation eased and manufacturers lowered their selling prices for the third month running," it noted.

The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) posted above the 50.0 no-change mark for the first time in four months during March, thereby signalling an improvement in business conditions at the end of Q1/2025.

At 50.5, the PMI was up from 49.2 in February and pointed to a slight strengthening in the health of the sector.

Vietnam's General Statistics Office is expected to announce the country’s Q1 growth data this week.

Andrew Harker, economics director at S&P GlobalMarket Intelligence, commented: "The Vietnamese manufacturing sector kicked into gear in March, seeing the first increases in output and new orders in 2025 so far. Firms will hopefully be able to build on these improvements in the months ahead."

"For now though, there is still a fair amount of caution among manufacturers, leading to a reluctance to hire additional staff or purchase extra inputs. This potentially reflects an uncertain international environment, with new export orders falling sharply during March."

The rise in output in part reflected improvements in the availability of goods, but also a renewed increase in new orders, which likewise expanded following a two-month sequence of decline.

Growth of new orders was recorded amid signs of improving customer demand, but was only slight amid ongoing weakness in international demand.

In fact, new export orders decreased markedly and at the fastest pace since July 2023. New business from abroad has now fallen in five successive months, according to S&P Global.

The company noted that while output and total new orders returned to growth, firms were slightly less confident in the year-ahead outlook for production than was the case in February.

"Sentiment remained positive amid higher new orders and hopes for stable demand, but optimism was below the series average."

Manufacturers exhibited caution with regards to employmentand purchasing in March. Staffing levels decreased for the sixth consecutive month, linked to a recent period of subdued demand and staff resignations.

That said, the drop in workforce numbers was the weakest in 2025 so far. Purchasing activity, meanwhile, decreased for the first time in four months, with firms suggesting that the recent period of input buying meant that holdings of goods were sufficient to support output requirements.

In turn, stocks of purchases decreased, albeit to the least marked extent since August last year. Stocks of finished goods were also down amid some reports that firms were reluctant to hold excess inventories.

Where firms did purchase inputs, they were faced with a further lengthening of suppliers' delivery times, often linked to delays receiving goods from abroad. That said, the latest deterioration in vendor performance was much less pronounced than that seen in February and the weakest in seven months.

Better stock availability was reported at suppliers and faster transportation. While higher costs for some imported items led input prices to increase again in March, muted demand for inputs led some suppliers to reduce their prices.

Overall, input costs increased only slightly and at the slowest pace in the current 20-month sequence of inflation. Meanwhile, efforts to maintain competitiveness led manufacturers in Vietnam to lower their selling prices for the third consecutive month. The fall was only slight, however.