Manufacturers see strongest rise in selling prices in 15 years

The impacts of the war also resulted in weaker business confidence, with optimism easing to a six-month low.

The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) remained above the 50.0 no-change mark in March, extending the current sequence of improving business conditions to nine months. The PMI dropped to 51.2 from February's 54.3 and pointed to the least marked strengthening of operating conditions since last September.

A key feature of the March PMI survey was the impact of the war in the Middle East on inflation. An increase in the price of oil resulted in higher costs for freight, fuel and transportation.

As a result, close to half of respondents recorded an increase in their input costs during March, with the pace of inflation the sharpest since April 2022.

With higher input costs often passed on to customers, output prices increased at one of the sharpest rates since the survey began in 2011. The pace of inflation seen in March was the steepest in just under 15 years.

Sharply rising prices in the sector acted to limit demand. Total new orders continued to rise as some firms reported that clients had purchased in advance to try to get ahead of price increases. The rate of expansion was only modest, however, and the weakest since last September.

Meanwhile, international demand suffered, with new export orders decreasing markedly following stable new business from abroad in February.

In line with the picture for total new business, manufacturing production increased at a much-reduced pace during March. The latest rise in output was the eleventh in as many months, but least pronounced since June 2025.

Slower growth of new orders and higher input costs led to a reluctance among manufacturers to commit to additional purchases in March. Input buying decreased markedly, ending an eight-month sequence of expansion. Stocks of purchases were also down.

Where firms did buy inputs, they faced a substantial lengthening of suppliers' delivery times, one that was the most pronounced in four years. Respondents indicated that higher fuel costs resulted in transportation delays.

As well as scaling back purchasing activity, manufacturers also signalled a reduction in employment. Staffing levels decreased for the first time in six months. Firms reported difficulties replacing departing staff members, and a drop in the number of temporary workers.

With employment down and firms facing difficulties securing materials, backlogs of work increased in March. The slight accumulation was the first in four months. In some cases, manufacturers used stocks of finished goods to help satisfy order requirements, resulting in a marked fall in post-production inventories.

Business confidence dropped to a six-month low in March amid concerns around the impact of the war in the Middle East on international demand, prices and the supply of materials.

Nevertheless, hopes that underlying demand would remain solid and support growth of new orders and output meant that firms on balance continued to predict an increase in production over the coming year.

Middle East conflict sends ripple effects across Vietnam's economy Escalation across the Middle East has tightened energy markets and disrupted key sea‑lanes, with spillover impacts across many sectors in Vietnam.

ASEAN countries exposed by Middle East oil dependence ASEAN countries are vulnerable to supply chain disruptions due to their heavy dependence on crude oil imports from the Middle East.

Vietnam manufacturing sees improved growth Manufacturing production increased rapidly in February, with expansion quickening to a 19-month-high.