Manufacturers’ Confidence Surges to 18-Month High, Spurring Increased Hiring

As per an April 1 industry report by S&P Global, manufacturers in Vietnam are increasingly optimistic about production prospects for the upcoming year.

Optimism reaches its peak in 18 months, driven by expectations of new product launches boosting output and an anticipated uptick in market demand fostering new order growth.

March witnessed intensified recruitment efforts among manufacturers, marking the second consecutive month of employment growth and the fastest pace since October 2022.

With rising staffing levels and a decline in new orders, firms managed to tackle their backlog for the second straight month, with the rate of depletion being the swiftest in five months.

However, the S&P Global Vietnam Manufacturing Purchasing Managers’ Index dipped below the 50-point threshold in March, indicating a cessation of the two-month streak of improving business conditions at the beginning of 2024. Despite this, operating conditions remained broadly unchanged overall.

March showed signs of demand softening, resulting in a decline in new orders despite offered discounts to stimulate sales. Additionally, new export orders saw a significant decrease, marking the most substantial decline since July 2023, attributed to competitive pressures and geopolitical tensions.

Amid reduced new orders, production scaled back at the end of the first quarter, albeit marginally, predominantly affecting intermediate goods firms while expansions were noted in consumer and investment goods producers.

Andrew Harker, Economics Director at S&P Global Market Intelligence, remarked, “Growth stalled in the Vietnamese manufacturing sector in March as subdued demand put the brakes on new orders and production. Demand weakness was also reflected in the PMI survey’s price indices, as input cost inflation slowed and an outright reduction in selling prices was recorded.”