Vietnam manufacturing sees improved growth

The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) rose to 54.3 points in February, up from 52.5 points 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.

Production increased at the fastest pace in over a year-and a-half amid a sharper increase in new orders. Panellists reported that the preparation of products ahead of delivery to clients and stronger customer demand were behind the latest rise in output.

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 in international 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.

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.

Andrew Harker, economics director at S&P Global Market Intelligence said, "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."

"Most of the key variables from the 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," Harker added.

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