Vietnamese manufacturers continued to expand their production output and new orders through mid-August, despite a slight slowdown.
The S&P Global Vietnam Manufacturing Purchasing Managers’ Index™ (PMI®) recorded 52.4 points in August, down from 54.7 in July. While this reflects a slight dip, it still indicates a solid improvement in business conditions, marking a strengthening trend over the past five months.
The manufacturing sector’s health improved with significant growth in output and new orders, though at a more moderate pace compared to the elevated rates seen in June and July.
Increased customer demand led to a rise in new orders, prompting firms to boost production. The relative stability in prices helped secure new business, with improving international demand contributing to a fifth consecutive month of rising new export orders.
Input costs and selling prices remained on the rise, but inflation rates eased significantly from July, reaching their lowest in four months.
Some manufacturers reported higher raw material prices, though inflation rates moderated due to competitive pressures. Lower oil prices also helped reduce transportation costs for some.
The strong growth in new orders and reduced cost pressures led to a sharp increase in purchasing activity in August, with growth rates accelerating for the fourth consecutive month, reaching their highest since May 2022.
However, the increase in purchased inputs was often used directly for production, leading to a decline in stock levels of both purchased inputs and finished goods.
In contrast to the rise in purchasing activity, employment saw its first decline in three months due to resignations and the end of temporary contracts.
Andrew Harker, Economics Director at S&P Global Market Intelligence, commented, “As anticipated, the Vietnamese manufacturing sector experienced a slowdown in the growth of output and new orders from the high levels of June and July. Although sustaining those elevated rates was challenging, the expansion remains robust. A notable issue is the drop in employment, which is complicating project completion and increasing outstanding business. We hope to see a rebound in job creation in the coming months.”
